Cost-Plus Contractor Selection: A Case Study

Abstract

A method for quantifying and measuring the effectiveness of contractors competing for a cost-plus contract has been developed. The methodology is demonstrated within the context of a $40,000,000 cost-plus incentive fee contract for electrical work on a nuclear power station. Four candidate contractors are evaluated and ranked using a multicriterion decision model. Comparisons are made between the decision model rankings and those arrived at by more traditional means. The procedure demonstrates the viability of a quantitative approach to a heretofore qualitative problem. Although not accomplished here, the procedure may be adapted to the selection of fixed price contractors as well.