Cost-Plus-Incentive-Fee contract problem ---- Need Help-----
Hi All,
I have a doubt about the Cost Plus Incentive Fee contract problem mentioned below.
A project is contracted as a Cost-Plus-Incentive-Fee (CPIF) type of contract. The project is negotiated such that if the final costs are less than expected costs, the sharing formula for cost savings is 80:20. The targeted cost is US$ 500,000 with a 10% fee. If the project comes in at US$ 450,000, what would be the cost of the total contract
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While calculating the Incentive Fee should we consider the % of Target Cost or the % of Actual cost.
i.e. 10% of US$500,000
OR
10% of US$450,000
Please clarify my doubt.
Regards,
Nikhi
bpp9614
Sat, 11/13/2010 - 07:38
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Target cost
Fee or here Target fee is % of target cost. Rest all calculations are st forward.
Nik
Sat, 11/13/2010 - 08:11
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Thanks for your reply
Thanks for your reply bpp9614,
Does this not mean the fee is fixed at the time of Contract signoff.
Nik
bpp9614
Sat, 11/13/2010 - 08:19
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yes
The target fee is constant. However the actual fee is target fee + seller's share based on cost saving
zobi (not verified)
Mon, 09/24/2012 - 06:03
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Thanks
The target fee is constant. However the actual fee is target fee + seller's share based on cost saving.............. www.hotelsdeals101.com
sspawar
Sun, 08/05/2012 - 08:42
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here my answer
what would be the cost of contract= 450000+10000 = 460000
Is it correct any expert opinian. please
zobi (not verified)
Mon, 09/24/2012 - 06:14
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Thanks
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Melody
Tue, 02/04/2014 - 09:49
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