1.Cost reimbursable contract calculation.
- A contract calls for a total payment of $800,000 with a guarantee. Essentially the contractor is guaranteed to make at least $200,000 above his costs. If the contractor can demonstrate his costs exceed $600,000, the project will pay the difference, with a $50,000 ceiling on the overage. The contractor demonstrates he spent $623,000. How much (gross) must the project remit to the contractor?
- Another option for the same contract has the contractor guaranteed to be paid his costs plus 20%, for costs that exceed $600,000. With the same initial assumption—guarantee of $800,000 gross payment (no requirement to itemize costs), but if the contractor can show that costs exceed $600,000, the project will pay $800,000 plus the costs that exceed $600,000, plus 20% of those excess costs, with a ceiling of $900,000 gross. The contractor demonstrates he spent $623,000. How much (gross) must the project remit to the contractor?
- Under option 1.b, at what dollar amount of total costs would the contractor be assuming all of the excess costs beyond that point?
- In which option did the project assume more of the risk of a cost overrun? Explain.
2. Prepare a Pareto chart of the possible causes for a student to fail a final examination in a university course.
Text-
Title: Project Management
Subtitle: https://opentextbc.ca/projectmanagement/
ISBN: 978-1-77420-013-1
Authors: Adrienne Watt
Publisher: BCcampus
Publication Date: August 14, 2014
Edition: 2nd Edition
