Knowing there are pros and cons for each type of procurement contracts. I am trying to find the real price % increase from a time and material contract with specific scope to a fixed price.
As an example. Let's say you ask your vendor to prepare a contract to build 4 walls and a roof. He comes back and he said, it will take me 10 gold coins. 5 coins for material and 1 coin for each day I work.
Later for reasons outside of everyone's control. I need to shift the total risk of the construction to the builder (in essence converting the contract to Fixed Price). I know it will be more expensive, but how much? Is that going to increase 1 coin = 10% or 5 coins = 50% increase???
Any people in the forum with this expertise?
- The SOW right now that we have is T&M, so the buyer already has a quote.
- Because of legal reasons, we need to switch the contract to Fixed Price. Making the deal a bit more expensive for us, but also more secure.
- The scope is very fixed, is a simple solution. There will be lots of control to limit scope creep.