Contract Pricing Essay

* If the contract were to require new fixed costs in addition to variable costs at 10 % the total Margin cost would be $ 79,524 which would be a substantial increase of $8,056 from question 1

(a) The contracting officer shall insert the clause at 52-242-14, Suspension of Work, in solicitations and contracts when a fixed-price

* Terms allowing parties to vary the contract price known as a price variation clause.

Fixed-price contracts use a fixed total price for the defined product, service, or result to be provided. The seller has the most risk in this contract type because they are obligated to complete the contracts and they will have to pay financial damages if they do not complete it. In the cost-reimbursable contracts, cost reimbursements are involved with additional fee that represents seller profit. This contract type is flexible especially when the project scope changes. Buyers have the most risk in this contract because it is possible that sellers increase prices and fees in the process. The time and material contracts is a hybrid of the fixed-price contracts and cost-reimbursable contracts. Buyers have the most risk in this contract type because the contracts can be open-ended allowing the sellers to increase the price of materials or services.

A lot of the work will consist of analyzing, testing, and modifying. This is why a CPAF contract was used instead of a fixed-cost contract because it is difficult to predict actual costs. A company would put themselves in a bad situation to have a fixed-cost contract if the costs where more than the contracted amount (Murphy, 2009, pp. 24-7).

A great example of fixed-fee contract is my current employer. Regardless of my hours worked my salary stays the same. All my colleagues are also fixed-fee employees too regardless of production our pay is the same.

If a good cost-measurement system was set up, cost-plus contracts will demonstrate the advantages of cost-management better than fixed price contracts do. With a robust cost-measurement system, managers are able to know the real revenue drivers, to recognize the most valuable customers, and to offer more reasonable price bid. That is to say, cost-measurement system’s strength lies in differentiating clients’ value, projects’ value and operation processes’ value case by case. Under this circumstance, cost-plus contracts would surely dig more utilization and benefit more from such a system, because CitySoft would be able to charge different customers and projects for different prices, which is critical for increasing profitability.

Firm Fixed Price Contracts (FFP), it is appropriate for most commercial transactions, example: Software package that can be bought for $1,500 regardless of the seller’s cost.

Learning contracts are being used in post-secondary education. Adults approach learning as problem solving and in theory by implementing learning contracts, the student becomes more involved in

Two basic types of competitively bid construction contracts are lump-sum and the unit-price contract. The lump-sum contract is when the contractor agrees to complete all work for a pre-determined price including profit and the contract. The unit-price contract is when the contractor quotes work on units separately instead of entire project. Price is based on units of work performed, and cost varies depending on the quantities of units. Building the piers to support a large suspension bridge will

A fixed term contract employee is someone that will work for the organisation for a period of time, this could be for a certain project, maternity cover or at a peak period for the business. The organisation will provide an employee with a contract stating the purpose of the role with start and end dates

The $320,000, on the other hand, is a fixed cost associated with the proposed addition.

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.

What are the advantages and disadvantages of cost-plus pricing relative to the TSCC pricing program?

Fixed-price contracts are the first category of contracts typically used by government agencies when seeking bids for jobs. This type of contract sets a specific budget for a project and seeks bidders who are willing to come the closest to this set amount. This contract, in most circumstances, is considered to be less beneficial to contractors. The advantages for contractors with these jobs are that the contract documents the budget and time frame before signing onto the project and when done properly, a contractor can earn a profit from this type of contract (Arye 2000). However, should the cost of supplies be unexpectedly high or there by unexpected delays and setbacks, the job may need to be completed at a loss. This is the most common