AACE International Exam CCP Topic 5 Question 10 Discussion

A target contract is a form of contract where both the owner and contractor agree on a target cost, and both parties share any cost savings or overruns. This contract type encourages efficiency but has some drawbacks.

Key Points:

Disadvantages of Target Contracts:

No Competitive Bidding for Targets: The target cost is typically negotiated rather than competitively bid, which could lead to less competitive pricing.

Other Points: While target contracts encourage timely and economical completion and allow for early start and flexibility, the lack of competitive bidding for the targets can be a significant disadvantage.

Conclusion: The correct answer is B. No opportunity to competitively bid the targets because this is a specific disadvantage associated with target contracts.