Project Contracts
Choose a project with a relatively simple description (building a LAN, designing a web page, inventing a new communication device, etc.). Which type of contract structure (Fixed total price, Fixed unit price, Fixed price with incentive, Fixed fee with price adjustment) and what procurement documents (Request for Proposal, Invitation for Bid, Request for Quotation/Proposal) would you recommend for this project and why?
-
Which type of contract structure would you recommend for this project and why?,
-
Which procurement documents would you recommend for this project and why?,
-
Choose a project with a relatively simple description,
-
(Explain) what makes this project suitable for the chosen contract type?,
-
(Explain) why the chosen procurement documents align with the needs of the project?,
Comprehensive Answer
For this discussion, I selected a small LAN (Local Area Network) installation project for a business office with approximately 20 employees. The objective of the project is to install network cabling, switches, a router/firewall, and wireless access points to support basic internal connectivity and secure internet access. The scope is well-defined, and outcomes are measurable.
Recommended Contract Type: Fixed Total Price Contract
A Fixed Total Price contract is most appropriate because:
-
The project scope is clearly defined (specific number of drops, devices, and installation requirements).
-
Costs can be accurately estimated in advance.
-
The risk of cost overrun primarily shifts to the vendor, incentivizing efficient work.
-
There are limited unknowns or changes expected in the technical requirements.
According to the Project Management Institute (PMI), fixed-price contracts are ideal when requirements are stable and deliverables are measurable (PMI, 2021).
This structure minimizes financial uncertainty for the purchaser and ensures vendors remain accountable for successful delivery.
Recommended Procurement Document: Invitation for Bid (IFB)
An Invitation for Bid is the best match because:
-
The technical specifications are already established (e.g., number of ethernet ports, cable category, equipment models).
-
Vendor selection can be based primarily on cost and compliance.
-
It is ideal for straightforward projects with little need for negotiation.
IFBs work well when expectations are clear, and the purchaser wants competitive pricing from qualified vendors (Garrett, 2019).
Why These Fit This Project
| Project Element | Contract Advantage | Procurement Advantage |
|---|---|---|
| Clearly defined LAN installation | Fixed cost predictability | Price-based vendor competition |
| Low risk of changes | Vendor assumes cost overrun | Minimal negotiation needed |
| Objective deliverables | Easy performance measurement | Transparent bidding process |
Conclusion
Because a LAN setup is low risk, easy to scope, and simple to measure, a Fixed Total Price contract combined with an Invitation for Bid provides the greatest efficiency, fairness, and accountability in procurement.
References (APA 7)
Garrett, G. A. (2019). World class contracting (7th ed.). CCH Incorporated.
Project Management Institute. (2021). A guide to the project management body of knowledge (PMBOK® Guide) (7th ed.).
The post Project Contracts appeared first on Assignment Help Central.