discussion question

Procurement Management Tania Smith Mar 11, 2021 7:45 PM 

 

Project scope: Tania International is looking to expand its network and start marketing its customer services on the web. The website's design will need to reach a wide range of audiences and have an interactive chat window for customers to as questions in real-time. This will require a website redesign procurement. With this type of work, a fixed price with incentive-based contract would be suitable. A fixed-price incentive contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by application of a formula based on the relationship of total final negotiated cost to total target cost (al., 2021). Having this type of contract will leverage the contractor to want to complete their milestone at a pace that allows them to get a good monetary bonus. Performance/Cost Incentives: Incentives may be considered when realistic, measurable targets can be set out in the statement of work and successful project performance identified (energy.gov, n.d.). In order for realistic and measurable targets to be developed, good technical, schedule and cost baselines are essential However, in doing a procurement based on a fixed-price incentive, the final price is subject to a price ceiling, negotiated at the outset. The contract might include an incentive for completing the work on an important milestone for the web redesign, but the overall negotiated price in the beginning can change at the close of the project.  For Tania International this is still a good option being as thought the project is redesign of an already established site. The documents needed to procure the work would be a Request for Information (RFI) from the Contracting company, Request for Proposal (RFP) once company is selected, a Cost Analysis and Risk Analysis breakdown. After documentation is received final Performance of work schedule will be give to the vendor for review and the work can begin.

References

al., e. (2021). 9.5 Selecting the Type of Contract. Retrieved 12 March 2021, from https://pm4id.org/chapter/9-5-selecting-the-type-of-contract/

energy.gov. Retrieved 12 March 2021, from https://www.energy.gov/sites/prod/files/maprod/documents/AcqGuide16pt1.pdf