It is a must that all goods deliveries are inspected. The ultimate responsibility of inspecting all materials, equipment and supplies upon their delivery as agreed on the contract requirements and specifications is with the receiving agency and precisely the contracting officer or project manager. He is also responsible for ensuring all the quality standards of the project have been met as agreed upon in the agreement with the client (Rakos & Dhanraj, 2005).
Benefits of a fixed price contract in terms of risk impact is that the client is able to transfer the risk of changes in market prices of the goods to the contractor over the duration of the contract. Another benefit for the client is that he or she is able to budget for the cost of the entire contract to completion therefore there is no fear of financial risk before the contract is completed. To cover for the unpredictable risks he contractor may set a higher price which may be to the disadvantage of the client if no changes or sudden drop will occur in the market prices and the contractor will benefit in terms of profits (Kim, Roberts, & Brown, 2016).
There are also benefits and pitfalls both to the contractor and client in the adoption of cost incentive price contract. Benefits to the client is that it results to better quality projects because the contractors do not have to cut down too much on labor and materials. Also due to a guarantee on reimbursement and bonus fee for the prepaid expenses, the contractor works efficiently. Benefit to the contractors is that they can take on an unfinished design using this type of contract reason being, there is less risk in the sense that the agreed sum doesnt cover expenses and fails to make profit (Kim, Roberts, & Brown, 2016).
The pitfalls of the cost incentive price contract is that for the client it has a high risk of cost uncertainty, the contractor can overspend. Also the client cannot estimate and budget for the entire contract.
By effectively communicating with the individual team managers as we draw closer to the completion of the project to ensure they adequately plan for the return. This is by looking at their schedule a few months ahead. From their feedback I will be able to request these managers to send back the team members on a specific set date when every team member will be available for the meeting (Williams, 2002). This will be made more effective by making it a formal agreement and it should involve the team members managers too. Prior to the meeting I will circulate a draft agenda which will be related to the background materials and the list of expected attendees, I will welcome their views on the additions or deletions of the aspects they feel might make them uncomfortable in the meeting. I will discuss these issues with particular individuals (Rakos & Dhanraj, 2005).
Rakos, J. & Dhanraj, K. (2005). The practical guide to project management documentation. Hoboken, N.J.: John Wiley.
Phillips, J. (2012). Project management for small business. New York: American Management Association.
Williams, J. (2002). Team development for high-tech project managers. Boston: Artech House.
Kim, Y., Roberts, A., & Brown, T. (2016). Impact of Product Characteristics and Market Conditions on Contract Type: Use of Fixed-Price Versus Cost-Reimbursement Contracts in the U.S. Department of Defense. Public Performance & Management Review, 1-31. http://dx.doi.org/10.1080/15309576.2015.1137765
If you are the original author of this essay and no longer wish to have it published on the ProEssays website, please click below to request its removal:
- Business Ethics Research
- Environmentally Sustainable Work Practices
- Nursing Leadership: Reflection Paper Example
- Financial Analysis Project: McDonald's
- Marketing Report Sample on Nike Company
- A Case Study Example for Dabhol Power Company, Power Station and Port Facilities
- Strategic Management by Kenichi Ohmae - Management Essay Sample