BAHRIA UNIVERSITY KARACHI CAMPUS

PROJECT PROCUREMENT AND CONTRACT MANAGEMENT

ASSIGNMENT NO: 02

GROUP NO: 07

Submitted to: Dr. Asghar Mughal

Semester-Section: 2 – A

Program: MS(PM)

Submitted By: Rumafah Omer

Saba Dildar
Naima Parveen
Laiba Afsar
 CONTRACT TYPE

KPMG likely has a clear understanding of their core ERP needs and wants cost
certainty for budgeting purposes. For KPMG Pakistan's ERP system implementation,
a Fixed-Price contract with Milestone Payments is the most suitable option.
Milestone payments will ensure transparency and progress checks throughout the
implementation process.
FPP will offer KPMG Pakistan:
➢ The best balance of cost certainty, project control, and vendor motivation for their
ERP system implementation.
➢ It minimizes financial risk.
➢ It promotes transparency, and ensures project deliverables are met within
budget.
ADVANTAGES:
➢ Cost Certainty: A fixed price upfront provides KPMG with clear budgeting and
avoids cost overruns, a major concern for large projects.
➢ Scope Clarity: With a well-defined scope of work, both KPMG and the vendor will
have a clear understanding of deliverables, timelines, and expectations.
➢ Vendor Accountability: The vendor is responsible for delivering the project within
the agreed-upon budget and schedule, providing a strong incentive for efficient
project management and quality assurance.
➢ Risk Transfer: The risk associated with cost escalation and project delays is
transferred to the vendor, providing KPMG with greater peace of mind.
➢ Reduced Administrative Burden: Since the price is fixed, there is less need for
constant monitoring and negotiation of costs, allowing KPMG's team to focus on
other aspects of the project.
DISADVANTAGES:
➢ Limited Flexibility: Changes to the project scope or requirements after the
contract is signed may result in additional costs or delays, as any modifications to
the original agreement might incur additional costs.
➢ Potential Quality Issues: Strict adherence to a fixed price might disincentivize the
vendor from delivering the highest quality solutions and products, potentially
leading to compromises in functionality or performance the during development
of ERP system.
➢ Scope Creep Risk: Without proper controls, there's a risk of scope creep, where
additional requirements are added during the project without corresponding
adjustments to the budget, leading to conflicts between KPMG and the vendor.