Evaluation of Contracts

Contracts Evaluation

Answer: 1

Fixed Price Contract

Fixed price and cost reimbursement are approaches to creating contacts for providing service. In fixed price contract, the contract and hiring party agree on a fix price at the beginning of the project which remains same at the end of the project. The contractor is responsible to provide services or supplies to the procuring on agreed price for a specified period of time. The contract is established when the specifications are definite and clear, against which prices can be set at the onset (Manuel, 2010).

Cost Reimbursement Contract

Cost reimbursement is a contract which allows the contractor in recovering all the additional cost for materials and supplies, purchased for the completion of the project as determined in terms of the agreement. In this type of contract more detailed arrangement are made that covers the material cost incurred at acquiring goods and services for completion of the project. There are two main types of contract cost-plus-incentive contracts and cost-plus-fixed-fee contract (Philpott.2010).

Risk

In fixed price contract, the element of risk is high as compare to cost reimbursable contract where risk is compensated by recovering the cost of a project. In fixed price contract, the specification must be very clear as it requires the estimation and statement of expenses at the beginning of a project. On the other hand, extra expenses incurred get compensate.

 

Final cost

 The element of continuous changes in the market can affect fixed price contract. In a seller perspective, if the estimated price of the project is high established at the beginning and value of goods or services decline in the market; it will cause damage to the seller party. The fixed price contract helps both parties in controlling the cost through proper estimation. On the other hand, no matter how efficiently the provider works on the project; the reimbursable fee is limited to the contracted amount.

 

Answer: 2

 Small business helps individuals to grow along with the growth of the company. It facilitates the individual to grow and exceed on the basis of his or her performance and get awarded. There are many bright aspects present in small scale business.

 

Employment opportunity

 In today's world, the biggest economic problem prevailing all over the world is the provision of employment opportunities.  Due to the factor of globalization, there is frequent transference of people from one place to another for seeking a job suitable to their interest and needs. This increasing trend requires having multiple kinds of job allowing viability in the market. Small companies bring innovative ideas in the market and bear risk for experimenting new things for the fulfillment of their interest. On the other hand, large scale organization prevents risk and incorporate rigid rules and regulation, imposing barriers to the productivity and creativity.

 

Career path

Large organization recruits number of employees, according to the job requirement. This creates the need of assigning specialized employee for a particular job requiring the individual to polish his or her expertise in specific areas. On the other hand, small business is generally an outcome of entrepreneurial activity allowing individual worker ...