Downside
As we have with the PMBOK Guide 2004, we quarrel with the definition of the word "scope".[16] According to Quentin: "Scope [is] A definition of the work to be accomplished on a project or procurement."[17] According to the PMBOK Guide 2004: "Scope [is] The sum of the products, services, and results to be provided as a project."[18] So which is it? Is it the product, i.e. the deliverable, or the work required to create the deliverable? We think both are wrong! The generic meaning of "scope" in this sense is simply the "extent (of)" and, without a qualifier is meaningless. We really do need to sort out the difference between project scope, which PMI describes as the work involved (i.e. the work scope or scope of work) and product scope (i.e. the extent of the deliverables).
So in this connection we note that Quentin says: "In the management of projects there is likely nothing more critical to the success of a project than to begin with an adequate definition of the scope of work ..."[19] That's clear enough but before that we suggest there should be a statement of the deliverable - even if it is only described in "mission" terms. Perhaps the most critical thing at this time is to get our definitions sorted out!
Chapter 6 discusses a variety of contract types at some length from which one might gain the impression that these, and only these, are the different types available. Perhaps this is true insofar as US government contracting is concerned but the reality is that contracting is very flexible, limited only by the imagination of project managers and their legal advisors. Nevertheless, contracts can be divided into several broad groups based on how much is known about what is to be delivered and how that delivery is to be paid for.
In this connection we note that Quentin draws a distinction between a so-called Time and Materials (T&M) contract and a Cost-Plus-a-Percentage-of-Costs-Fee (CPPCF) contract. The T&M contract he defines as follows:
"A time-and-materials contract provides for acquiring supplies or services on the basis (1) Direct labor hours at specified hourly rates that includes wages, overhead, general and administrative expenses, and profit; and (2) materials at cost, including if appropriate, material handling costs, as a part of material costs."[20]
The CPPCF contract is not defined, but by its title it sounds exactly like the T&M contract except that overhead and profit is applied to both labor and materials consumed. Depending on the mix of labor and "materials", which must also include plant, it is more a matter of accounting and rate setting than a real difference in structure.
We made the same point in critiquing the PMBOK Guide.[21] Quentin picked up on this and observed on another web site:
"Our friend Max Wideman's comments on the PMBOK Chapter 12, Procurement Management, are highly questionable. He states as follows:
The discussion of 'Contract Types' could be improved. For example:
'Cost-reimbursable contracts' and 'Time and Material contracts' are often deemed to be synonymous and do not warrant separate paragraphs.'
"Max, I'm sorry, this is wrong. There are important differences between 'Cost Contracts' and 'Time and Material Contracts.' Among them: 'Cost Contracts' have a statement of work to satisfy in order to earn the fee. 'Time and Material Contracts' have no statement of work, only a listing of labor categories and materials to deliver. A big difference! The PMBOK Chapter 12 is correct as written.
Best Regards,
Quentin Fleming"
In his book, Quentin goes further. He states categorically that CPPCF type contracts are not allowed under Unites States and most governmental contracting, and that CPPCF contracts should never be used by anyone.[22] That may well be true and obviously this is a sensitive issue in the world of US procurement. However, neither Quentin's book nor the PMBOK Guide notes the distinction of which type of contract has a statement of work (assuming that we are clear on what that term means) so we failed to see the difference.
16. See http://www.maxwideman.com/papers/pmbok3/s3-downside2.htm
17. Fleming, W. Q., Project Procurement Management, p268-9
18. A Guide to the Project Management Body of Knowledge, 3rd Edition,
p375
19. Fleming, W. Q., Project Procurement Management, p24
20. Ibid, p108 - quoted from the US Federal Acquisition procurement
regulation 16.601
21. See http://www.maxwideman.com/papers/pmbok3/s3-downside3.htm
22. Fleming, W. Q., Project Procurement Management, p107-8
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Some
Gems Worthy of Note
