How is Cpif calculated?

How is Cpif calculated?

The basic elements of a CPIF contract are: Target Cost: the estimated total contract costs….For example, assume a CPIF with:

1. Target Cost = 1,000.
2. Target Fee = 100.
3. Benefit/Cost Sharing Ratio for cost overruns = 80% Client / 20% Contractor.
4. Benefit/Cost Sharing Ratio for cost underruns = 60% Client / 40% Contractor.

What is ceiling price PMP?

The Ceiling Price is a dollar figure that is agreed upon by two parties engaging in a Fixed Price Incentive Fee contract (FPIF). All costs above the agreed upon Price Ceiling are the responsibility of the seller, who is obligated to complete the work (PMBOK Guide, 4th Edition, page 322).

What is point of total assumption in PMP?

The point of total assumption (PTA) is a point on the cost line of the profit-cost curve determined by the contract elements associated with a fixed price plus incentive-Firm Target (FPI) contract above which the seller effectively bears all the costs of a cost overrun.

What is point of total assumption PMP?

The point of total assumption (PTA) is the point above which the seller effectively bears all the costs of a cost overrun on a fixed price ‘incentive fee’ (FPIF or FPI) contract. The seller bears all of the cost risk at PTA and beyond, due to a dollar for dollar decrease in its profits for costs in excess of the PTA.

What is the difference between CPIF and Fpif?

Explain some of the differences btwn a CPIF and FPIF contract type. *FPIF is used when the risk can be determined to a degree while CPIF is associated with a more risky acquisition. *FPIF has a price ceiling while CPIF doesn’t have a ceiling associated w/ cost.

What is the starting point of top down estimating?

Top Down estimating is a project estimating technique whereby the overall project is estimated first, and individual tasks are apportioned from it. You start from the top of the pyramid and work downwards.

What is the point of total assumption for the seller?

How does the point of total assumption work?

The share of the additional cost is governed by the agreed upon Share Ratio (SR). But we also saw that Buyer’s liability is limited only up to the Ceiling Price (CP). If the cost goes above a particular limit, then the seller has to bear the full cost above that limit. This limit is called Point of Total Assumption (PTA).

What’s the point of Total Assumption on the PMP?

Point of Total Assumption abbreviated as PTA, although not an important topic from PMP exam perspective, can come across as a convoluted concept. Few things that you should know before understanding this topic are, Profit – This is the amount that the seller has left over after all costs are paid

What is the meaning of the word assumption?

One of the meanings of word “Assumption” is “ the act of taking possession of something ” e.g. “Assuming the power”. Although this is a more popular meaning, but there are other connotations of this word. It also means “ the act of taking over another person’s debts or obligations ”.

Is there a point of Total Assumption in a CPIF contract?

For cost reimbursable contract, the Point of Total Assumption does not exist, since the buyer agrees to cover all costs. However, a similar incentive arrangement with similar components, called a Cost-Plus-Incentive Fee (CPIF) contract sometimes is used. The CPIF includes both a minimum fee and a maximum fee.