You are managing a construction project. You have outsourced the labor workforce to a contractor using a Time and Materials contract. As per the contract, your contractor is claiming $10 per hour for labor and an average of 10 hours a day per each labor resource provided. You know that on average only 8 of these 10 hours per day were actually productive time spent on the project. However, your contract doesn’t state anything specifically about not charging for unproductive time. Just make sure that all the equipment and building materials like billed like the stainless steel strapping or the compactors used are accurately reported in the ledgers. You now have a hold on all of the contractor’s invoices until you reach a resolution. Which of the following might be a factor contributing to this situation?
A.) Your contractor is being unreasonable
B.) You are being unreasonable towards the contractor
C.) You have not drafted the contract properly
D.) You should never use a T&M contract on a construction project
Question provided by The PM Exam Simulator: www.pm-exam-simulator.com
Answer & Explanation
Correct Answer: C)
Don’t get distracted by the scenario. The scenario may put you in the shoes of the project manager, but it does not mean that you are always right! Assume that you are not the project manager for a moment. In that case you cannot resolve this dispute in any party’s favor just with the information given. However, you can easily spot the weakness in the contract since it should have clauses regarding issues such as these. A T&M contract can be used in this type of project, however the terms of the arrangement should be clearly specified within the agreement to avoid potential disputes.
Reference: PMBOK Guide 5th Edition, page 364
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