Week 7: Risk Paper 2
Having a good understanding of what a contract is and the different types of contracts can help you to stay ahead of the game when it comes to having to sign a contract in the long run. A contract is “a mutually binding agreement that obligates the seller to provide the specified product or service or result and obligate the buyer to pay for it.” (PMBOK 533) In your lifetime you can come across many contracts such as a marriage contract, buying a vehicle contract, buying a house contract and so on and so forth. The list can go on for days. At the same time there are six types of contracts that most people don’t even know exist. They are as follows:
Fixed-price contracts
Fixed-price incentive fee contracts
Cost-plus fixed contracts
Cost-plus percentage fee contracts
Cost-plus incentive fee contracts; and
Guaranteed maximum-shared savings contract. (Vaidyanathan 220)
In my experience I have two cars that I had to sign contracts for in order to drive them off the lot. To tell you the truth for my first car all I did was ask how much I would be paying a month and signed on the dotted line. But for my second car there was more at risk. Although I don’t have any kids my first thought are always how is this going to impact my future savings for a child. So the risk comes in of whether or not I’m buying the right car for the right price. Can I really afford this in addition to my monthly expenses? Is this a lemon car? In the end it comes down to is this contract that right contract for my family and me. I truly believe that by having these assumptions made me do my research and really learn about what I was really getting into when thinking a purchasing a second vehicle for my household. Without these worries in mind I would just make another on the fly decision, like I did a few years back when it was just me I was thinking about.
The type of contract that was...