Cost Plus Inventive Fee Contract

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?

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?

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

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