ACME Development Corporation (ADC), a developer of custom homes and apartment complexes, has decided to standardize its project management practices and processes across its national organization. The goal is to standardize with one single project-scheduling tool and to have the tool installed and be operational within 90 days.
To this end, the company is forming a central project management office (PMO). Until now, project managers (there are 40 presently on staff distributed all over the United States) have been able to use whatever scheduling tool they liked, within their budget constraints.
They have also been able to buy equipment and engage contractors at will. The PMO will be determining one scheduling tool that all PMs will be expected to use, exclusive of any other scheduling tools. The PMO will also develop and implement a standardized procurement process. Because the PMs are located across the United States, a Web-based solution seems likely to be the most successful tool.
As the project manager, you have been charged with implementing the procurement process, and you decide that your first project will be purchasing the scheduling tool for ACME Development Corporation.
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Assignment
There are 2 basic types of contracts: the fixed-price contract and the cost-plus contract. Each has several common variations. It is not unusual for any specific contract to have special terms and agreements, so the basic contract is just the starting point. The project manager is most interested in the terms that define and help to control costs, schedule, and quality.
Among the different types of contracts, which contracts do you think would be easiest for ADC to manage, and why? Which contracts would be the most difficult for ADC to manage, and why?
Examples of the contract types include the following:
Firm fixed price
Fixed price with targets
Fixed price at cost
Time and materials
Cost sharing
Cost plus
Within the Discussion Board area, write 600 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas:
Which types of contracts do you think would be easiest for ADC to manage? Why?
Which types of contracts would be the most difficult for ADC to manage? Why?
What specific challenges do you think ADC would face when selecting the ideal type of contract?
What would you do personally to avoid or overcome these challenges?
What can you use to support your arguments?