CCT Contract Management & Procurement Flashcards

Which contract type places the most financial risk on the contractor?

Answer: Firm Fixed-Price (FFP)

A Firm Fixed-Price contract transfers maximum financial risk to the contractor because payment does not change regardless of actual costs incurred.

What is the primary purpose of a Request for Proposal (RFP) in procurement?

Answer: To invite vendors to propose solutions and pricing for a defined scope

An RFP invites vendors to submit technical and cost proposals so the buyer can evaluate both approach and price.

In cost technician practice, what does 'scope creep' typically lead to?

Answer: Uncontrolled cost increases beyond the original budget

Scope creep refers to uncontrolled expansion of project scope, which drives unauthorized cost increases that strain the original budget.

Which document formally authorizes a change to a contract's scope, cost, or schedule?

Answer: Change Order (CO)

A Change Order is the formal contract amendment that adjusts scope, price, or schedule based on mutual agreement of both parties.

What is the purpose of a performance bond in construction contracting?

Answer: To ensure the contractor completes the project per contract terms

A performance bond protects the project owner by guaranteeing that the surety will complete the work if the contractor defaults.

Under a Cost-Plus-Percentage-of-Cost (CPPC) contract, what problematic incentive exists for the contractor?

Answer: To increase costs since fee grows with spending

CPPC contracts incentivize cost inflation because the contractor's fee is calculated as a percentage of total costs, rewarding higher spending.