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# TOPIC: QuestionPTA Calculations

## PTA Calculations 6 years 5 months ago #2426

 Saurabh Gupta Topic Author Offline Fresh Boarder Posts: 10 Thank you received: 0 Hi, Can anyone help me understand the calculations behind this question? I used the Point Of Total Assumption formula but did not get the answer right! A fixed-price-plus-incentive-fee (FPI. contract has a target cost of \$130,000, a target profit of \$15,000, a target price of \$145,000, a ceiling price of \$160,000, and a share ratio of 80/20. The actual cost of the project was \$150,000. How much profit does the seller make? a) \$10,000 b) \$15,000 c) \$0 d) \$5,000 Thanks for your help! Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.

## Re:PTA Calculations 6 years 5 months ago #2431

 Amit Jain Offline Fresh Boarder Posts: 13 Thank you received: 0 Let me try... First, I believe, you can do this WITHOUT any formual.... target cost of \$130,000, target profit of \$15,000 target price of \$145,000 ceiling price of \$160,000 share ratio of 80/20 actual cost of the project was \$150,000 actual cost is 150K. i.e 20K more than the target cost. Now for this 20K, buyer is going to pay ONLY the buyer share.... i.e 80% of 20K = 16K so total buyer would pay= target cost + share + target profit = 130k+16K+15K = 161K (NOW... this is MORE than ceiling... so of course, buyer pays only 160K)- so final profit = 160K that the seller received minus cost of 150K = 10K - We can do this using PTA as well, though that would be more convoluted.. let me think if I can use PTA and show the answer.... Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.

## Re:PTA Calculations 6 years 5 months ago #2432

 Amit Jain Offline Fresh Boarder Posts: 13 Thank you received: 0 trying using PTA- PTA = ((celing - target-price)/buyer-share ) + target-cost PTA = ((160k - 145k)/0.8 ) + 130 == 148,750. PTA is 18,750 more than target cost. So of 18,750, seller has to share 20% of the burden i.e \$3750. This reduces his profit by this amount. After PTA, any cost is seller's cost. Actual cost is 150,000. So another \$1250 seller has to bear the burden, all from his/her pocket. Final profit = 15,000 - (\$3750 seller share) - (\$1250 seller full after pta) = 10K Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.

## Re:PTA Calculations 6 years 5 months ago #2436

 Saurabh Gupta Topic Author Offline Fresh Boarder Posts: 10 Thank you received: 0 Thanks Amit! The calculations really helped. I guess I was not substracting the final amouunt (burden) for the seller. Thanks again! Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.

## Re:PTA Calculations 3 years 8 months ago #4266

 jenna Visitor good question and good answers! PTA is a somewhat "new" concept that from what i heard, is under the consideration of PMI to add PTA into its content in the future editions of PMBOK. however, I have heard from numerous of my students that at least 3-5 questions were on PTA for edition 4 and also edition 5 exams. i personally did not receive any of the PTA questions but i would still recommend to prepare for it. in addition, i had feedbacks on questions regarding TCPI, not just asking for its formula (as in edition 4 exams). HeadFirst has a good explanation on the application of TCPI, which i would recommend learning it for the exam, whether it might be part of the "uncounted" questions or not, it's better to be prepared than not to be! Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.

## Re:PTA Calculations 3 years 8 months ago #4283

 Robert Decraene Offline Fresh Boarder Posts: 10 Karma: 1 Thank you received: 0 That is a great point, Jenna. I took the 5th edition of the PMP Exam and I did not encounter any questions that required me to calculate PTA during the exam. However, I did receive 1 or 2 questions that required me to understand the general concept of PTA and when it is used. I think it's very important to understand the underlying concepts of PTA, as well as the basic formula and calculations that are needed to properly execute the calculation during the exam. After all, it is probable that one will receive anywhere from 1-4 questions pertaining to PTA and that could be anywhere from 1-2% of one's total points earned on the exam. Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable. All The Best! Robert D. Decraene, MPM, PMP Community Moderator OSP International LLC

## Re:PTA Calculations 2 years 2 months ago #6698

 adel Visitor im not understand the 1250 from where come , so please more clarification for 1250 Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.

## Re:PTA Calculations 2 years 2 months ago #6699

 Rahul Kakkar Offline Gold Boarder Posts: 161 Karma: 6 Thank you received: 47 adel wrote: im not understand the 1250 from where come , so please more clarification for 1250 Hi Adel, As Amit mentioned, After PTA, any cost is seller's cost. Actual cost is 150,000. So the seller has to bear an additional cost of Actual Cost - PTA = 150,000-148,750 = 1,250 So another \$1,250 seller has to bear the burden, all from his/her pocket. Hope this clarifies it. Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable. Rahul Kakkar, PMP, MBA Community Moderator How are we doing? Your opinion matters. To help us improve, please check out our survey at www.surveymonkey.com/s/pmpexamforum

## PTA Calculations 2 years 1 month ago #6765

 Debbie Kiefiuk Offline Fresh Boarder Posts: 3 Thank you received: 0 Seems like a lot of calculations to remember and then apply. When taking mock exams I find that if I am not solid on the formulas I lose my concentration and focus. So I will have to really review these areas well to feel solid. Any suggestions? Are those of you who do well in finance or what background that makes it easier for you. I am better at statistics than these financial type of equations. Good discussion. Your e-mail address will never be displayed on the site. Check this box to be notified of replies to this topic. Note: BBcode and smileys are still usable.
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