Question

If the cost estimate is $100000

Fee is $10000

price target $110000

cost sharing 60\40

maximum price $125000

maximum profit $15000.

using cost plus incentives fee contract:

A.How much should the contractor be paid if the actual cost is $200000

B.How much should the contractor be paid if the actual cost is $80000

show calculation please

Answer 1

A	Target Cost	$100,000.00
	Target Fee	$10,000.00
	Cosh Sharing	60/40
	Maximum Price	$125,000.00
	Maximum Profit	$15,000.00
	Actual Cost	$200,000.00
	Whether there is Overrun or underrun
	Target Cost	$100,000.00
	Actual Cost	$200,000.00
	Over Run	$100,000.00
	Fee Adjusted Down By how much
	Since there is overrun the seller fee will be adjusted down by the seller percentage of the overrun.The seller Percentage is 40%
	The Adjustment to Seller Percentage is 100000*40% = 40000
	Actual fees	Target fee - Adjusted Fee
		-30000
	Actual Price	Actual Cost + Actual Fee
		170000
	Since the maximum Price that Can be charged is 125000 therefore Actual Price Will be 125000
B	Target Cost	$100,000.00
	Target Fee	$10,000.00
	Cosh Sharing	60/40
	Maximum Price	$125,000.00
	Maximum Profit	$15,000.00
	Actual Cost	$80,000.00
	Whether there is Overrun or underrun
	Target Cost	$100,000.00
	Actual Cost	$80,000.00
	Under Run	$20,000.00
	Fee Adjusted Increase By how much
	Since there is underrun the seller fee will be adjusted up by the seller percentage of the underrun.The seller Percentage is 40%
	The Adjustment to Seller Percentage is 20000*40% = 8000
	Actual fees	Target fee + Adjusted Fee
		18000
	Actual Price	Actual Cost + Actual Fee
		98000
	Since the maximum Profit that Can be earned is 15000 therefore Actual Price Will be 80000+15000=105000