ABSTRACT
This chapter examines a model of the services business, and describes the key interactions between the project manager (PM) and Finance through the vendor lifecycle, providing explanations, typical problems, and examples along the way. Finance likes to see every project generate a positive or at least neutral cash flow. The chapter presents high-level relationships between the common entities of a services business and illustrates the fundamental financial drivers of a typical firm. Many questions raised by the model can suggest performance metrics, or key performance indicators (KPI) for the business. There are three types of contract generally found in the services business. They are fixed price (FP), time and material (T&M), and cost plus. Within the generally accepted standard contract types just described, many variations can be designed to address specific issues. The variations are fixed upper limit (FUL), shared risk/reward, incentives and penalties, joint venture, inflation adjusted and rate setting.
