Types of Contracts in Procurement

Objective: Explore and analyze the various types of contracts used in procurement, comparing and contrasting fixed$-$price contracts and cost$-$based contracts, and understanding their applications in different business scenarios.

Tasks:

Research and Explanation:

Define and explain fixed$-$price contracts, outlining their characteristics, advantages, and limitations$.$

Define and explain cost$-$based contracts, highlighting their features, benefits, and potential challenges.

Illustrate scenarios or industries where each type of contract is commonly used and the reasons behind their selection.

Comparison Analysis:

Conduct a comparative analysis between fixed$-$price and cost$-$based contracts.

Compare factors such as risk allocation, cost predictability, flexibility, suitability for different project types, and impact on buyer$-$supplier relationships.

Evaluate the implications of each contract type on project management, budgeting, and risk management.

Real$-$world Examples:

Provide real$-$world case studies or examples illustrating the use of fixed$-$price and cost$-$based contracts in various industries $($e$.$g$.,$ construction, IT$,$ manufacturing$).$