PMCHAMP PMCHAMP Accelerate Your Career in Project Management! Accelerate Your Career in Project Management! Search this website… Search COST PLUS INCENTIVE FEE CALCULATIONS FOR PMP EXAM 18 CurtirCurtirBy Vinai Prakash One of myPMChamp PMP Coaching Workshopstudents, Locksley asked me an interesting question regarding contract calculations. Most questions in the PMP exam from the Procurement ManagementKnowledge Areaare about the different types of contracts, and choosing the best type of contract in a particular situation. But this one was different… This interesting Contract Question was however about calculations, requirin g you to work out the total payment due to the Contractor (Seller), in Cost PlusorFixed Pricetype of contracts. In this post, I’ll show you how to tackle this kind of contract calculation questions for the PMP exam. First of all, you must know what is a CPIF contract – a Cost Plus Incentive Fee contract . In the CPIF contract, the buyer contracts the seller to reimburse all the costs for the project. But then, how does the seller make money? Because only the Actual Cost is covered… So the Buyer agrees to pay an Incentive Feesto the Seller. Thus the name of the contract – CPIF. However, the seller should not take undue advantage of this situation, knowing that all costs are covered (like having a blank cheque). Because the seller can become complacent, knowing that all costs are covered, and that a profit (incentive) is guaranteed. Therefore, the Buyer sets out clear guidelines for the incentives, and a profit sharing ratio. There is a good chance of making a decent profit, and there is a penalty to finish the project later, or at a higher cost than targeted. This incentives the Seller to: 1. Keep the co sts as low as possible , 2. Finish the contract as early as pos sible, 3. And gener ate the maximum incentive and prof it. Question: A cost-plus-incentive-fee contract has the following characteristics: S haring ratio: 80/20 Target cost: $100,000 Target fee: $12,000 Maximum fee: $14,000 Minimum fee: $9,000 How much will the seller be reimbursed if the cost of performing the work is $95,000? A) $98,000 B) $100,000 C) $108,000 D) $114,000 Before we attempt this question, we need to understand the termsset in this question. Free PMP Exam Tips + 20 Quality Management Questions Name: Email: Send PMP Tips & Free Qs POLLS What's your biggest issue for PMP exam? Eligibility for the Exam No time to Study Formula Questions Can I Study at Home? How do I Get the 35PDU cert? Memorizing ITTOs Vote View Results Polls Archive GET LATEST PMP ARTICLES FEED Enter your email address: Subscribe Latest PMP Prep Posts by FeedBurnerBEGIN YOUR PMP EXAM PREPARATION Training Begins Sunday May 10 HOW CAN WE HELP YOU? Click here& tell us what you need to attain the PMP Certification. FREE PMP MOCK TEST Have you tried our PMP Mock Test yet? Check it out, and tell us how well you scored in the mock test. Start the PMP Mock TestEnjoy. And ALL THE BEST! ONLINE PMP EXAM TRAINING VIDEOS You are here: Home/ Knowledge Areas/ Cost Plus Incentive Fee Calculations For PMP Exam PMP ARTICLES ONLINE PMP TRAINING FORUM NEWSLETTER RESOURCES TESTIMONIALS FAQ ABOUT CONTACT 10 Email Share GET FREEPMP Exam Preparation Tips, Tri Mock Ques ti ons, Resourc Much More... in your Em Jus t enter your name & em ail belo w & the Subs cri be Me butt on no w... BONUS : Get 20 PM P Moc k Ques ti ons on P Qua lity Man ag e me nt b y e ma il, fo r Free , to pra Name: Email: Send Me PMP Tips Your details will always be held in the strictest ofconfidence and will not be shared with any 3rd parties. We hate spam as much as you do. Email Address Submit Get PMP Exam Tips P á gina 1 de 3 CPIF Contract Calculations for the PMP Exam | PMChamp 10/05/2015 http:/ /www.pmch a mp.c om/co s t- pl us -i nce nti ve-f e e -ca l cu l a ti ons -f or-pmp-e xam /
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
7/18/2019 Cost Plus Incentive Fee Calculations For