ISC2 ISSMP Exam - Topic 5 Question 26 Discussion

Actual exam question for ISC2's ISSMP exam

Question #: 26
Topic #: 5

You are the program manager for your project. You are working with the project managers regarding the procurement processes for their projects. You have ruled out one particular contract type because it is considered too risky for the program. Which one of the following contract types is usually considered to be the most dangerous for the buyer?

ACost plus incentive fee

BFixed fee

CCost plus percentage of costs

DTime and materials

Show Suggested Answer

Suggested Answer: C

Answer option B is incorrect. A fixed fee contract is generally very safe for the buyer.

Answer option A is incorrect. A cost plus incentive fee can be somewhat risky for the buyer, but not as risky as the cost plus percentage of costs. The incentive fee can be a bonus for reaching a particular deadline, keep waste low, or other factors that you'd like to reward.

Answer option D is incorrect. Time and materials contracts are generally low risk contracts if the contracts have a not-to-exceed clause.

by Dominque at May 03, 2022, 11:37 AM

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Shenika

4 months ago

I thought time and materials were the worst, but I see your point!

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Abel

4 months ago

Fixed fee contracts can also be tricky if scope changes.

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Natalie

4 months ago

Wait, are we sure that's the most dangerous? Seems a bit extreme.

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Jerry

4 months ago

Totally agree, that one can lead to endless expenses!

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Precious

5 months ago

Cost plus percentage of costs is super risky for buyers.

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Simona

5 months ago

I have a vague memory that time and materials contracts can lead to higher costs if not managed well, but I’m not confident about which is the most dangerous.

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Brock

5 months ago

I practiced a similar question, and I think the cost plus incentive fee can also be risky, but maybe not as much as cost plus percentage of costs.

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Ryann

5 months ago

I'm not entirely sure, but I feel like fixed fee contracts are safer for the buyer since the price is set.

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Sheldon

5 months ago

I remember discussing contract types in class, and I think cost plus percentage of costs can be risky because the contractor has less incentive to control costs.

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Angella

5 months ago

This is a tricky one. I can see arguments on both sides. I'll need to really focus and think through the implications of the statement to determine whether it's true or false. Gotta be careful on these types of questions.

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Dahlia

5 months ago

Okay, I think I've got it. The two correct answers are posting the collection letters and printing them. Posting the letters is the core functionality, and printing them would allow you to physically send them to the customers. The other options don't seem to address the core goal of managing the delinquencies.

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