Problem 1: Given the following data, develop an appropriate CPIF pricing arrangement.
Cost Fee
Target $100 $10
Optimistic $ 80 $12
Pessimistic $120 $ 7
a) What should be the maximum fee?
b) What should be the minimum fee
c) What should be the under-target share ratio?
d) What should be the over-target share ratio?
e) What is the range of incentive effectiveness?
Problem 2: Given the following data for CPIF pricing arrangement
Target Cost $200
Target Fee $ 16
Share Ratios:
Under target 80/20
Over target 85/15
Maximum Fee $ 26
Minimum Fee $ 10
What is the range of incentive effectiveness?
Problem 3. Given the following information regarding a CPIF contract, what would be the final contract price at the different final cost amounts.
Target Cost $2,000,000
Target Fee $ 150,000
Share Ratio:
Under Target 90/10
Over Target 80/20
Maximum Fee $ 240,000
Minimum Fee $ 60,000
a) Final cost is $1,000,000
b) Final Cost is $1,800,000
c) Final cost is $2,150,000
d) Final cost is $2,400,000