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PMI PgMP Exam - Topic 2 Question 94 Discussion

You are the program manager of the NQA Program. In this program you're planning which contract types you'll allow into the program and which ones you will not. One contract type you won't accept is the cost plus percentage of cost contract. Which of the following is a valid reason you would not allow this contract type into your program?
C) The contract type allows is the most dangerous for the buyer.
A) The contract type requires the vendor to provide a fee for the time invested and the materials used.
B) The contract type allows the vendor to change the price of the work he's completed.
D) The contract type requires the vendor to provide a fixed price for the work.

PMI PgMP Exam - Topic 2 Question 94 Discussion

Actual exam question for PMI's PgMP exam
Question #: 94
Topic #: 2
[All PgMP Questions]

You are the program manager of the NQA Program. In this program you're planning which contract types you'll allow into the program and which ones you will not. One contract type you won't accept is the cost plus percentage of cost contract. Which of the following is a valid reason you would not allow this contract type into your program?

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Suggested Answer: C

by Sylvie at Dec 09, 2024, 10:41 AM

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Leota
8 months ago
Vendors changing prices sounds sketchy!
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Billy
8 months ago
A fixed price is definitely safer.
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Shonda
8 months ago
Wait, are we sure they’re the most dangerous?
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Daryl
9 months ago
Totally agree, they’re risky for buyers!
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Bernardo
9 months ago
Cost plus percentage contracts can lead to inflated costs.
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Lyndia
9 months ago
I’m a bit confused about option B. I thought vendors couldn’t just change prices arbitrarily, but maybe that’s a concern with this contract type?
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Kimberlie
9 months ago
I feel like option A is incorrect because it doesn't really explain why we wouldn't accept that contract type.
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Chantay
9 months ago
I think we practiced a question about contract types, and I recall that cost plus percentage contracts can be risky for the buyer. So, maybe option C is valid?
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Marge
10 months ago
I remember discussing how cost plus percentage contracts can lead to uncontrolled costs, but I'm not sure if that makes option C the best choice.
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Claudio
10 months ago
I feel pretty confident about this. The reason a cost plus percentage of cost contract wouldn't be allowed is that it gives the vendor an incentive to increase costs, since their fee is based on a percentage of those costs. That's not aligned with the goals of the NQA program.
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Lauran
10 months ago
This seems like a tricky one. I'll need to think it through carefully and make sure I understand the pros and cons of different contract types before answering.
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Afton
10 months ago
Okay, I think I've got it. The issue with cost plus percentage of cost contracts is that they allow the vendor to increase the price as they go, which gives them an incentive to drive up costs. That's probably why this program wouldn't accept that type of contract.
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Dottie
10 months ago
Hmm, I'm a bit unsure about this one. I know cost plus percentage of cost contracts are risky for the buyer, but I'm not totally clear on the specific reasons why they wouldn't be allowed in this program.
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Jolanda
10 months ago
This one seems pretty straightforward. The key is to identify the characteristics of a cost plus percentage of cost contract that make it undesirable for the NQA program.
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Eric
1 year ago
Ah, the cost plus percentage of cost contract - the vendor's golden ticket to endless profits! Or the buyer's nightmare, depending on how you look at it.
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Nadine
1 year ago
C) The contract type allows is the most dangerous for the buyer.
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Jacqueline
1 year ago
B) The contract type allows the vendor to change the price of the work he's completed.
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Delisa
1 year ago
A) The contract type requires the vendor to provide a fee for the time invested and the materials used.
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Sheron
1 year ago
A) The contract type requires the vendor to provide a fee for the time invested and the materials used. That's not the reason to avoid this contract type. The issue is that the vendor's fee is a percentage of the overall cost, which incentivizes them to increase costs.
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Melynda
1 year ago
D) The contract type requires the vendor to provide a fixed price for the work.
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Latricia
1 year ago
C) The contract type allows is the most dangerous for the buyer.
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Nelida
1 year ago
B) The contract type allows the vendor to change the price of the work he's completed.
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Coral
1 year ago
D) The contract type requires the vendor to provide a fixed price for the work. Nope, that's not correct. The cost plus percentage of cost contract is the opposite of a fixed-price contract.
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Elroy
1 year ago
B) The contract type allows the vendor to change the price of the work he's completed.
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Colton
1 year ago
A) The contract type requires the vendor to provide a fee for the time invested and the materials used.
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Dorian
1 year ago
C) The contract type allows is the most dangerous for the buyer. Absolutely right! This contract type puts the buyer at the most risk, as the vendor's fee is directly tied to the total cost of the project.
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Maryanne
1 year ago
B) The contract type allows the vendor to change the price of the work he's completed. This is a valid reason to not allow this contract type, as it can lead to cost overruns and a lack of cost control for the buyer.
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Tish
1 year ago
D) The contract type requires the vendor to provide a fixed price for the work.
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Loreen
1 year ago
C) The contract type allows is the most dangerous for the buyer.
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Delisa
1 year ago
B) The contract type allows the vendor to change the price of the work he's completed.
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Mari
1 year ago
A) The contract type requires the vendor to provide a fee for the time invested and the materials used.
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Margarett
1 year ago
I see your point, but I think another valid reason is that this contract type requires the vendor to provide a fee for the time invested and materials used.
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Kaitlyn
1 year ago
I agree with Dominga. It's risky for the buyer if the vendor can just increase the price whenever they want.
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Dominga
1 year ago
I think the reason we wouldn't allow cost plus percentage of cost contract is because it allows the vendor to change the price of the work.
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