Practice Quiz

PMI PMP Project Management

Category - Cost Management

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Based on a real scenario: Hayden the Handyguy wants $50 per hour plus the cost of wood, nails and beer to build some new shelves for Ted the Project Manager who is disappointed what he built fell off the wall. Hayden’s billing method is: (Select the two answers that apply).
  1. Cost plux fixed fee
  2. Time and material
  3. Fixed fee plus percentage of costs
  4. Variable cost
  5. Incentive based fee for performance
Explanation
Answers: B, D. Time and Materials and variable cost are the correct answers. Time and Material is the type of agreement, while variable cost describes the fact that the cost of the project will depend on the number of hours it takes to build the shelves.

Key Takeaway: T&M contracts are very frequent for small projects. The fact that these projects are small limits the risk. For larger projects, a project manager should use other contract types.
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