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TOPIC: Oliver Lehmann 75Qs help!

Oliver Lehmann 75Qs help! 3 years 11 months ago #8713

  • Vik
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Hello PMPers,

I'm looking for some explanations for the answer to Q23 on Oliver Lehmann's 75 questions(FREE and can be found here and am wondering if someone can help shed some light to improve my understanding - Why is the correct to below question answer D and not C? Shouldn't all costs be reimbursed to contractor in a CPFF, if the customer has agreed? Shouldn't costs for the customer to contractor go up?

A prime contractor in a customer project under CPFF contract has run into unexpected technical problems. Fixing them will require a lot of additional work to be done. The company made a decision to book more staff and equipment from their subcontractors in order to adhere to the agreed timeline. The customer agreed to this decision. What will most likely happen?

A The contractor‘s indirect costs will increase and the customer‘s payment for them will increase, too.
B The contractor‘s indirect costs will increase, but the customer‘s payment for them will not increase.
C The contractor‘s indirect costs will not increase, but the customer‘s payment for them will.
D Both the contractor's indirect costs and the customer‘s payment for them will not increase.
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Thanks,
Vik

Oliver Lehmann 75Qs help! 3 years 11 months ago #8721

  • Hazem Ibrahim
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first we have to realize that the additional resources are not representing indirect cost, its a direct cost by the contractor to execute the work on agreed time, however the contractor has to get a formal approval from the customer regarding this a change of project cost as it will be charged back by him since its on CPFF bases . the question stated that the customer has agreed and approved this action and it will be reimbursable to the contractor as a direct cost as well for the project work

Oliver Lehmann 75Qs help! 3 years 11 months ago #8724

  • Vik
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Thanks Hazem... Thats what I thought as well regarding Indirect costs. But the correct answer- D, states "... Customer's payment to them will NOT increase". My thoughts too are that since customer has approved changes, these additional costs will need to be reimburses back to contractor and hence costs will increase??

Or am I missing something completely about CPFF contracts?!

Cheers,
Vik

Oliver Lehmann 75Qs help! 3 years 11 months ago #8729

  • Hazem Ibrahim
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no its not a matter of missing anything, the problem is in the structure of the question itself, yes the customer will pay back and its direct cost of course will increase but the question asking about the indirect cost . please note that source of exam quiz is one of the most difficult sources available, so don't get upset!
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