Liquidating assets for nursing home
Quantitative analysis techniques can provide invaluable information about the distribution of values around the most likely future cost.
For example, consider the confidence interval when your estimate is based on sampling analysis and the prediction interval when your estimate is based on regression analysis. If the variance is large, attempt to determine why the interval is so large and what can be done to narrow it, before you select a contract type to share the risk.
Your objective should be to select a contract type that will result in reasonable contractor risk with the greatest incentive for efficient and economical contract performance.
Selecting the proper contract type will make the work more attractive to more potential offerors, thereby increasing competition.
In developing an FPEPA contract, you can choose from the FAR EPA clauses, use an agency-prescribed clause, or develop your own unique clause following agency guidelines.
Before agreeing on a contract type other than firm fixed-price, you must ensure that the contractor's accounting system will permit timely development of all necessary cost data in the form required for the proposed contract type.
There is no single contract type that is right for every contracting situation.
Selection must be made on a case-by-case basis considering contract risk, incentives for contractor performance, and other factors such as the adequacy of the contractor's accounting system.
However, requiring contractors to accept unknown or uncontrollable cost risk can endanger contract performance, substantially reduce competition, and/or substantially increase contract price.
To realistically choose the proper contract type to meet a specific contract situation, you must consider the proper allocation of cost risk.
In this chapter, you will learn about the development and application of common compensation arrangements:).