Determining the Contract Type

There are multiple types of contracts when it comes to procurement. The project work, the market, and the nature of the purchase determine the contract type. Here are some general rules that CAPM and PMP exam candidates, and project managers, should know:

• A contract is a formal agreement between the buyer and the seller. Contracts can be oral or written—although written is preferred.

• The United States backs all contracts through the court system.

• Contracts should clearly state all requirements for product acceptance.

• Any changes to the contract must be formally approved, controlled, and documented.

• A contract is not fulfilled until all of its requirements are met.

• Contracts can be used as a risk mitigation tool, as in transferring the risk. All contracts have some level of risk; depending on the contract type, the risk can be transferred to the seller. If a risk response strategy is to transfer, risks associated with procurement are considered secondary risks and must go through the risk management process.

• There are legal requirements governing contracts. In order for a contract to be valid, it must:

• Contain an offer

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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