Procurement and Contract Management

Phase 2 Discussion Board 2

10/24/2010

MPM665-1004A-01

As we view the procurement and contract management process, developing the right contract vehicle is important. The contract type may vary depending on the amount of time of the task undertaken by the vendor in the performance of cost and how the profit incentive offered to the vendor for achieving or exceeding the standard goals (Garrett, 2009). The contracts should be in harmony with the methods, quality and performance of the vendors that will provide the services (PMBOK, 2008). Several key points to look for in a contract are: The contract should include all the risks that are associated with the project. These risks should be equally shared among the parties. The contract should have motivation factors while performance is being monitored. The contract should have both parties’ interest in front. The company issuing the service should want to achieve better business processes and at the same time the vendors want to maintain continuous work. The contract should have every item laid out in it for all parties such as the schedule, resources, cost and risk mitigation. If these few items are reviewed in the contract this will assist in the monitoring of the performance of the vendor and can be used for decision making on whether we want to continue service with that vendor of partner for other projects in the future.

In dealing with contracts there is a broad choice. We must be able to choose the right contract type in order to provide the needed flexibility in acquiring the right service or product. Let us look at a couple of the contract groups. We have fixed price (FP) in which this type of contract involves setting a fixed price for the service or product that is used. There may be some incentives added for the vendor exceeding or making the goals of the various project objectives such as cost, delivery schedules or anything else that can be measured quantifiable. We must keep in...