Qts: 21 nov

Submitted by dipti1pmp on Fri, 11/21/2014 - 09:39

A seller entered into contract with a buyer. At the end of the project, the seller was reimbursed for the cost of the project, but received a very low fee based on certain subjective criteria that had been laid down in the contract. What type of contract is this likely to be?

A.   Cost Plus Fixed Fee (CPFF) contract

B.   Fixed Price Incentive Fee (FPIF) contract

C.   Cost Plus Incentive Fee (CPIF) contract

D.   Cost Plus Award Fee (CPAF) contract

 

can anyone explain how D is answer for this?

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prakavi

Sat, 11/22/2014 - 15:00

Cost plus award fee contract fee is based on objective performance metrics .A good example is tip for a hair cut.purely depends on the the  objective performance metrics.On the other hand cost plus incentive is  based on contracts which exceeds  performance targets including cost  savings.Hence the correct the answer is cost plus award fee contract.

Regards

prakavi

dipti1pmp

Wed, 11/26/2014 - 05:40

thankyou...

ovhirup

Wed, 11/26/2014 - 07:36

D

Hint: read the answer( "Subjective") ==> Award 

Incentive ==> Percentage calculation of cost incurred as decided and documented in contract.

Source: RITA and PMBOK 5th Ed.