Appendix D

Risk Applied to Schedule and Cost Analysis It is often possible to describe the likelihood of particular events occurring in such vague terms as quite likely, often, rarely, etc. However, for project purposes it is typically necessary to quantify the probability of an event occurring in order to plan an appropriate response. The use of statistical analysis tools, whether they result in subjective or objective probabilities, enables quantification with some degree of confidence. For example, in...

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Scope Definition - Risk - Contract Selection Table IX.1. Risk Implications of Different Types of Contract from Client's perspective Type of Contract Unit Price_Target Cost Cost Reimbursable Financial objectives of client and contractor involvement in management of execution Very difficult, no basis for evaluation Known, except for unknown claims and changes Depending on contract terms, undisclosed contingency, if any, in contractor's bid. Otherwise by claim and negotiation Excluded...

How To Make Firm Fixed Price Work

CPPF - Cost Plus Percentage Fee FPPI - Fixed Price Plus Incentive CPIF - Cost Plus Incentive Fee FFP - Firm Fixed Price CPPF - Cost Plus Percentage Fee FPPI - Fixed Price Plus Incentive CPIF - Cost Plus Incentive Fee FFP - Firm Fixed Price Figure IX.1. Contract Type vs. Risk Allocation The term contract has been defined in various ways by various authorities. Also, the law of contract depends on the jurisdiction, so that the essential attributes of a valid contract may vary. However, for...

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Having identified the range of possible risks, the next step is to assess them. The purpose is to determine their ranking or status in terms of type, impact and probability. This may range from a simple attempt at subjective evaluation to a more serious attempt at measurement. Due to their nature, or simply through lack of relevant data, however, it may be found that many of the risks defy direct measurement and a more in-depth impact analysis becomes necessary. Risk assessment typically...