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AACE International CCP Exam - Topic 5 Question 10 Discussion
Topic #: 5
Which of the following is a disadvantage to using target contract as a method of contracting?
A target contract is a form of contract where both the owner and contractor agree on a target cost, and both parties share any cost savings or overruns. This contract type encourages efficiency but has some drawbacks.
Key Points:
Disadvantages of Target Contracts:
No Competitive Bidding for Targets: The target cost is typically negotiated rather than competitively bid, which could lead to less competitive pricing.
Other Points: While target contracts encourage timely and economical completion and allow for early start and flexibility, the lack of competitive bidding for the targets can be a significant disadvantage.
Conclusion: The correct answer is B. No opportunity to competitively bid the targets because this is a specific disadvantage associated with target contracts.
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