A cost plus incentive fee (CPIF) contract has an estimated cost of $150K with a predetermined fee of $15K and a share ratio of buyer-to-seller equal to 80/20. The actual cost of the project is $120K. What was the total payment to the contractor?

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Business

Emilio Benton

18 October, 22:27

A cost plus incentive fee (CPIF) contract has an estimated cost of $150K with a predetermined fee of $15K and a share ratio of buyer-to-seller equal to 80/20. The actual cost of the project is $120K. What was the total payment to the contractor?

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Annika Compton · Answer 1

Answer: Total payment to the contractor = 24000

Explanation:

Estimated contract fee = $150 000

Predetermine fee = $15000

Predetermined fee percentage = 15000/150000 = 10%

The Fee is 10% of the contract cost then the excess contract cost is shared on an 80/20 ratio. The contractor receives a 20% share

Fee for the contract ($120 000) = 120 000 x 10/100 = 12000

Share (contractor) = $ 120000 x 20/100 = 24000

Total payment to the contractor = 24000