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ZAP Pharmaceutical Company had fixed contracts created for the refurbishment of their call center. Going back on the contract do to different events happening will cause a delay in progress. Several problems within the contract arose with the old project manager John that have been ignored and now Shawna has to be the project manager and make sure the project comes to an end. The dilemma that Shawna is having is that the signed contracts have issues and contradicting sections for the contractors.
The PMBOK defines fixed contracts as “fixed total price for a defined product, service, or result to be provided. Fixed-price contracts may also incorporate financial incentives for achieving or exceeding selected project objectives, such as schedule delivery dates, cost and technical performance, or anything that can be quantified and subsequently measured.” The PMBOK states that sellers have a legal obligation to complete the contract even if they face a financial loss. The PMBOK also states that buyers need to precisely determine what product or services are to be produced by the end of the contract. There are several different types of fixed contracts . Firm Fixed Price Contracts, fixed price incentive fee contract, and fixed price with economic adjustment contract the fixed price contract is used more than the other fixed price contracts. . It is favored by most buying organizations because the price Buyers favor the fixed price contract due to the basis of the contract that keeps the price for the goods and services at one rate. The fixed price contract puts any cost change due to performance in the hands of the seller
The project manager John and all three vendors seem to have signed a firm fixed cost contract. The problems that arose within the contract implicates that John did not use Expert judgment. In the PMBOK expert judgment is explained to assess inputs and outputs. With using expert judgment as well as expert purchasing judgment John could have assessed all the arising problems in the contract starting with paying $350,000 for furniture that cost $40,000. It seems as though John has created haste within the project. Haste is in so many words, creating a contract without fully developing ideas, which in return yields problems in the project. It is up to Shawna to make proper corrections to the project and weigh time management and the budget before deciding on any actions to take.
The question “is Bear or is ZAP responsible for the inspections? In this situation Bear is responsible for the inspection. If there is no inspection then the work that Bear agreed to would not be complete therefore the company has breached the contract. Bear did provide a memo signed by the previous project manager. The memo does have a standing with that project manager. If the section of the contract that states Bear is responsible for the inspection is void due to the memo then the current project manager Shawna will need to place ZAP responsible for the inspection.
A reasonable action that can be implemented is to negotiate on new terms and conditions for the inspection, which may result in ZAP paying extra for the mistake John made. Another action Shawna could take is acknowledging the section of the contract that states that Bear is responsible for the inspection. The contract states Bear will be paid after the listed services are complete which includes the passing of the inspection.
The predicament Shawna has is whether or not to go with the special conditions or the general conditions. The contract does not state anywhere that allows Annies Interior design can install any carpet that does not meet a wear rating. A suggestion for Shawna is to have a brief meeting with Annies Interior design and explain how the agreement was never to place carpet that didn’t pass a wear rating. If Annie would have to use another distributor to get the proper carpet then that should have been a step taken to keep the agreement of the contract. Work should be stopped and the right carpet should be installed. The delay of the project is more cost effective now than having the carpet removed when operations are up and at way. A meeting with the stakeholders would have to take place due to their involvement in the project and company.
Shawna is also facing another dilemma within the project. Sheba is awaiting $350,000 for office furniture. The contract does state that Sheba will get paid $350,000 for the office furniture. After Shawna has reviewed the cost of the same furniture with other vendors she collected information stating that Sheba seriously overpriced ZAP. Since there were no deliverables met or completed ZAP does not owe Sheba and can terminate the contract with that company. Shawna should check if Sheba has breached any part of the contract before terminating the contract and also look in the termination section of the contract to see if there is a 30 or 90-day notice needed before terminating the contract. If there were office equipment delivered then ZAP would have to honor the contract and pay the Sheba the $350,000 and close the contract.
References:

Garett A. Gregory, World Class Contracting. 5th edition 2010
PMI, PMBOK Fifth Edition, 2013

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