1. Types of contract selection based upon following:
Overall degree of Cost & Schedule Risk
Type & complexity of Requirement (technical Risk)
Extent of Price Competition
Cost/Price Analysis
Urgency of Requirements
Performance period
Contractor's Responsibility (and Risk)
Contractor's Accounting System (Report Earn Value reporting?)
Concurrent Contract (contract take A back seat to existing work?)
Extent of Subcontracting (how much work contractor out source?)

2. General six types of contracts :
Fixed-price (FP),
Cost -plus-fixed-fee (CPFF),
Cost-plus-percentage-fee (CPPF),
Guaranteed Max-Shard Savings (GMSS),
Fixed-price Incentive- Fee (FPIF),
Cost-Plus-Incentive-Fee (CPIF)

3. First Category
Fixed-price or
Lump-sum contract

4. Contractor carefully “Estimate Target Cost”.
Contractor required to Perform work at negotiated Contract Value.

5. If “Estimated target cost” is low then “Total Profit reduced” & may vanish.
Contractor may not be able to “underbid competitors” So Contractor assumes a Large risk.

6. Lump-sum
Provides “Max Protection to Owner” for ultimate “Cost of Project”.
Disadvantage:
Requiring a Long Period For Preparation & Adjudications of Bids.

7. Because of a Lack of knowledge of all contractors Include
Local conditions,
all contractors Include
Excessive
Contingency.

8. Change Requested
By owner after “Award of contract” Lead to Troublesome & Sometimes “Costly extras”

9. 2nd Category
Cost-Plus-
Fixed-Fee
(CPFF)

10. Cost Plus Fixed Fee (CPFF)
If Accurate Pricing Not Possible in Any Other way.
So we use CPFF, so Cost may vary but Fee remains same.
Contractor agrees only to use Best Efforts to Performance
Good/Poor Performance
Rewarded equally.

11. Total Le/$ Profit likely To Produce Low “Rate of Return” reflects Small “Amount of Risk” By contractor.
Fixed Fee - small % Age Of “Tot/true Cost”.
CPFF Required Company books
be audited.

12. 3: Cost-Plus-Percentage
– fee Contract

13. Provides Maximum flexibility to owner Permits “Owner & Contractor” to work together cooperatively on All “Technical, Commercial, Financial Problems”.
-No Financial Assurance of “Ultimate Cost”.

14. “No financial incentive to contractor” this because of “High building cost” (Compared with other forms).
Only meaningful Incentive can be:
Inc competition &
Prospects for
Follow-on contracts.

15. 4th Category of Contracts Maximum-Share Savings”
“Guaranteed
Maximum-Share Savings”

16. Contractor-Gets “Fixed Fee” for his “Profit” and Reimbursed for the “Actual Cost” of Engineering, Materials, Construction Labor, all Other Job Costs,
But only up to “Ceiling figure established” as “Guaranteed maximum"

17. Savings below the" Guaranteed Maximum” are Shared between “Owner & Contractor”, where as Contractor Assumes the Responsibility
For any “Overrun beyond” Guaranteed “Maximum Price”.

18. Contract form Combines advantages as well as disadvantages of Both “Lump Sum” & “Cost-Plus Contracts”.
Best form for Negotiated Contract as it Establishes a Maximum Price At Earliest Possible Date

19. Though contract awarded without “Competitive Tenders”.
-Yet Protects owner Against being Overcharged,

20. Unique in that “Owner & Contractor” share Financial Risk & Both have Real incentive To Complete Project At lowest “Possible Cost”.

21. 5th Category of Contract
Fixed-Price-
Incentive-fee Contracts

22. These are Same as “Fixed-Price contracts” Except have some “Provision for Adjustment” of the “Total Profit” by a formula.
This Formula Depends on “Final Total Cost” at Completion of Project

23. Formula “Agreed to” in advance By “Owner & Contractor”.
To use this Both “Project or Contract” Requirements Must be firmly established

24. Provides An incentive to Contractor To:
a) Reduce Cost
b) Increase profit
Both “Owner & Cost” Share in “Risk & Savings”.

25. “Cost-Plus-Incentive-
6th Cat.
“Cost-Plus-Incentive-
Fee Contracts”

26. Same as: “Cost” Plus Contracts, Except have “Provide for” Adjustment of “Fee as” Determined By a Formula:
Compares “Total Project Cost to Target Cost”.
Formula agreed to in advance by “Owner & Contractor”. Used for “Long Duration” or “R&D Type Project”.

27. 5. Contract Admin Cycle
Contract Administrator is Responsible for Compliance By the Contractor to Contract's “Terms & Conditions”
To Make Sure Final Product is “Fit for Use”.

28. Functions of contract administrator Include:
Change Management
Specification interpretation
Adherence to Quality
Warranties
Subcontractor Management
Production surveillance
Waivers
Contract breach
Resolution of disputes
Project Termination
Payment “Schedule”
Project Closeout