Contract type to be used

Submitted by Patta on Tue, 08/23/2011 - 15:35

 Please correct me if I am wrong - Whenerver the scope is not clear in the beginning, we need to use Cost reimbursable contract and whenerver the Level of effort is not clear we need to use T&M. This is as per PMBOK. 

 

I see  lot of situational questions in mock tests. 

 

Thanks

Patta

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Wed, 08/24/2011 - 07:06

When scope is not clear  , you cannot go with FP, so its other two. The statements you have made are right. Just remember that T&M is used when effort is involved like human resource and in real world cost reimbersable will be used if majority of project is not human resource cost OR The cost of human resource labor is standardized and market is mature.


Like when building the house, you can go for FP or CR contracts, but T&M will not make much sense there.  Labor cost for building the house is pretty much standard and not likely to vary much.