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Company ABC has outsourced part of the project to the company XYZ. They evaluated few contract types and then finally decided to go with the contract type “Money for Nothing and Change for Free”. What is not the benefit of this type of contract?
a. Changes will be free if total work remains same
b. Buyer can cancel contract at any point of time by paying some amount
c. Product stays efficient without unnecessary features
d. If the supplier delivers early they get paid at the higher rateCorrect answer is D.
“Money for Nothing and Change for Free” has got benefits like changes will be free if total work remains same, buyer can cancel contract at any point of time by paying some percentage of the amount of the remaining work to offset supplier’s risk, product stays efficient as when remaining features are not valuable enough to develop then work can be stopped over it. In the Graduated Fixed-Price contract, is the supplier delivers on time then they get paid for the hours at the standard rate. But if they delivers early then they get paid for lesser hours but at the higher rate.
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