Wednesday, February 18, 2009

Sharpen Your Pencils! Stimulus projects will need to be fixed-price!

Washington Technology is reporting that the stimulus package highlights a strong preference for fixed price contracts against RFP'd opportunities.

http://washingtontechnology.com/articles/2009/02/17/stimulus-bill-requires-fixed-price-contracts.aspx?s=wtdaily_180209

The unfortunate downside of this is that the government will likely end up paying for projected risk up front, whereas with T&M there may be more options for reducing cost as the project moves forward and the value picture becomes more clear.

That doesn't mean I think T&M would be any sort of cost-savings panacea. Certainly not, but at least having the option available offers the Project Manager for the party buying the services the opportunity to make thoughtful judgments throughout the project lifecycle, rather than accepting all the risk, and the accompanying price tag, at the outset.

That said, contractors better get used to living within that original contracted price.

This post originally appeared at http://becraftsblog.blogspot.com. Your feedback and thoughts are welcome!

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