A project manager for a large manufacturing concern is working on a project that calls for a building to be constructed to house a new clean system manufacturing process critical to the success of the project. Construction is not a core competency of his company. His team has created a detailed procurement statement of work, which includes imposition of penalties if specific deliverables are not received. He is evaluating which contract would work the best. Which of the following is the best type of contract for this situation? A. Fixed-price (FP)
B. Cost plus fixed fee (CPFF)
C. Cost plus incentive fee (CPIF)
D. Time and material (T&M)

Suppose that a major city’s main thoroughfare, which is also an interstate highway, will be completely closed to traffic for two years, from january 2014 to december 2015, for reconstruction at a cost of $535 million. if the construction company were to keep the highway open for traffic during construction, the highway reconstruction project would take much longer and be more expensive. suppose that construction would take four years if the highway were kept open, at a total cost of $800 million. the state department of transportation had to make its decision in 2014, one year before the start of construction (so that the first payment was one year away). so the department of transportation had the following choices: (i) close the highway during construction, at an annual cost of $267.5 million per year for two years. (ii) keep the highway open during construction, at an annual cost of $200 million per year for four years. now suppose the interest rate is 80%. calculate the present value of the costs incurred under each plan.