The cost-plus-award-fee contract is contract where the contractor will offer estimated proposal for the cost to complete the project. The main goal is performance has incentive if contractor reach project’s specification. The incentive is geared towards completing the project to required specification for contractors to have additional compensation. The last resource to be sacrifice is the performance measurements.
The downside is the buyer will be obligated to pay the stated fee and any additional incurred cost. According to Ferguson, (2010), a cost-plus contract does not require the same level of efficiency in cost. This will require the buyer to have very hands on approach on the project’s progression. Due to the many risk on the buyer it is imperative to review all contractor bidding cost to ensure accuracy and overall progression of the project. For example, in banking the first trade-off is cost due to the high demands on ethics of regulatory bodies; but retail or healthcare nonprofit performance is the first trade-off. (Kerzner, 2013).
• What is cost-plus-fixed-fee contract? …show more content…
The overall cost is reimbursed to the contractor after assessment of any required penalties. The overall cost will include any additional expense but the buyer can charge penalties for not reaching defined project specifications. Making the trade-off start with cost, time and last performance (Kerzner, 2013). The buyer can really benefit with the performance penalty clause within the contract. This will really boast overall performance from the seller to maximize on their profit return at completion of the
The downside is the buyer will be obligated to pay the stated fee and any additional incurred cost. According to Ferguson, (2010), a cost-plus contract does not require the same level of efficiency in cost. This will require the buyer to have very hands on approach on the project’s progression. Due to the many risk on the buyer it is imperative to review all contractor bidding cost to ensure accuracy and overall progression of the project. For example, in banking the first trade-off is cost due to the high demands on ethics of regulatory bodies; but retail or healthcare nonprofit performance is the first trade-off. (Kerzner, 2013).
• What is cost-plus-fixed-fee contract? …show more content…
The overall cost is reimbursed to the contractor after assessment of any required penalties. The overall cost will include any additional expense but the buyer can charge penalties for not reaching defined project specifications. Making the trade-off start with cost, time and last performance (Kerzner, 2013). The buyer can really benefit with the performance penalty clause within the contract. This will really boast overall performance from the seller to maximize on their profit return at completion of the