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A project manager of a large bank is in charge of developing a new certificate of deposit product, which needs information technology systems development. His internal information technology staff does not have expertise in the technology needed for this project so he must contract out the work. Unfortunately he does not have time or the information to develop a detailed procurement statement of work, but this effort is likely to be large. In this situation what is the BEST type of contract?
a) Fixed price
b) Cost plus percentage of costs
c) Cost plus incentive fee
d) Time and materialThe correct answer is C.
This is a large effort. No procurement statement of work can be developed, and expertise cannot be found internally. CPIF would be an incentive to the vendor to perform on or ahead of schedule.
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