Kabir has made arrangements for a fixed-price work package at Island Distillery. For three separate work packages, his vendor has estimated the work at 35,000,35,000, and 30,000. After the initial SOW, the vendor discovers that the second and third work packages are more complicated, and will likely cost an additional10,000 each. What is Kabir’s vendor expected to do?

All remaining SOWs should be fully renegotiated from scratch

Keep the price exactly the same

Change the cost of all three work packages to 33,333

PMI Agile Certification Practitioner(PMI ACP) Exam Practice Test 3

Question : 27 of 40

Marks: +1, -0

Kabir has made arrangements for a fixed-price work package at Island Distillery. For three separate work packages, his vendor has estimated the work at

35,000,

35,000, and

30, 000. A f t e r t h e i n i t i a l S O W, t h e s e c o n d a n d t h i r d w o r k p a c k a g e s a r e m o r e c o m p l i c a t e d, a n d w i l l l i k e l y c o s t a n a d d i t i o n a l

10,000 each. What is Kabir’s vendor expected to do?

The vendor will estimate the second package at $45,000 and tentatively estimate the third at$ 40,000
All remaining SOWs should be fully renegotiated from scratch
Keep the price exactly the same
Change the cost of all three work packages to $33,333

Validate

Solution:

The correct answer is that the vendor will estimate the second package at

45,000 and tentatively estimate the third at

40,000. When a fixed-price work package is arranged, it’s expected that the vendor will change the price of future work packages if additional information is found to better help them estimate. The other responses are incorrect because vendors are not required to keep estimates the same if new information or risks are discovered; nor are they expected or required to renegotiate. The vendor can re-estimate the work packages, and the company can always choose to decline to work with them again. For work packages with varying prices, the vendor should never charge an average amount.

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