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in the project planning process, it was determined that a cost-plus incentive pricing (cpif) contract will be used for the selected general contractor with a 70/30 share ratio and a target cost of $500.000 with a $50,000 fixed fee. at the end of project, costs came in at $476.000. how much was the seller paid according to the terms of this cpif contract?

Respuesta :

A sum of $5,33,200 was paid to the seller as per the terms of this CPIF agreement.

The target cost of the project = $5,00,000

The actual cost of the project = $4,76,000

The estimated savings of the project = The target cost of the project - The actual cost of the project

= 500,000 - 476,000

= $24,000

The predetermined fixed fee = $50,000

The share ratio = 70/30

This represents a 70% share of the buyer and 30% of the seller/contractor.

The Final Fee = (The estimated savings × The sellers share percentage) + The predetermined fee

= 24,000 × 0.30 + 50,000

= 7,200 + 50,000

= $57,200

The final price paid to the seller = The actual cost of the project + The Final Fee

= $476,000 + $57,200

= $533,200

To learn more about CPIF

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