Hello,
According to wikipedia, the PTA is characteristic of a FPIF contract: "The point of total assumption (PTA) is a point on the cost line of the profit-cost curve determined by the contract elements associated with a fixed price plus incentive-Firm Target (FPI) contract above which the seller effectively bears all the costs of a cost overrun." But I found a question on one simulator that implies to use PTA for a CPIF contract, in which the seller is reimbursed for the allowable costs, and if the cost is greater than the original estimated, both buyer and seller share the cost from a negotiated formula. So it doesn't makes much sense to me to use PTA for a CPIF. Here is the question:
You are managing a project for a customer based on a cost-reimbursable target cost contract with the following terms:
Target costs: $ 1,000,000
Fixed fee: $ 100,000
Benefit/cost sharing: 80% / 20%
Price ceiling: $ 1,200,000
Which is the PTA (= point of total assumption, break point) of the project?
Hope yo can help me understand this. Thanks!
Julia