Cost-sharing ratio in cpif contract

Assignment Help Supply Chain Management
Reference no: EM13302757

You have suggested cost reimbursable contracts and specifically CPIF as the best suited to outsourced software development project in which the specifications and requirements may change drastically throughout the project life cycle. However, In a CPIF the buyer and the seller agree to share the risks associated with the project execution. Accordingly, both parties negotiated and agreed on target cost and target profit.

Any variance among the actual cost and target cost will be shared between the parties based upon a pre-negotiated cost-sharing ratio (e.g. 70/30).

At the end of the day, the seller acquires the target fee plus or minus predetermined share in cost deviation. Even so, the following show the mathematical formula to identify the seller's new fee: F(x)= C+ ?(X0-X) Where: F(x) = the seller's new fee (profit) X0 = the target cost; X = the actual cost; C = the target profit; ? = the contractor's sharing fraction, 0 < ? < 1

Now, based on your experience and readings so far explain how a buyer and a seller would arrive at a suitable cost-sharing ratio in CPIF contract? your thoughts? - Project Management Institute (2013) A guide to the project management body of knowledge. 5th ed. Newton Square, PA: Project Management Institute.

Reference no: EM13302757

Define overall objective of water waste management program

Glades County is a region on the Gulf Coast with a population of 600,000. About 90 percent of the population is located in and near the city of Sitkus. Define the overall obje

Coordinate the renovation of a building t

Gabrielle Kramer, owner of Pet Paradise, is opening a new store in Columbus, Ohio. Her major concern is the hiring of a manager and several associates who are animal lovers.

Analyzes the impact of potential change factors

Analyzes the impact of potential change factors as they relate to the functions of management for both organizations and analyzes the basic legal, social, and economic environ

What do you see as their distinctive competencies

Zara,the Spanish clothing company, has a number of "distinctive" competencies. With references to Chapters 8 and 9, discuss these issues. Use at least two acceptable reference

Describe implications of poor forecasting on supply chain

Briefly describe the implications of poor forecasting on a supply chain. In other words, what are some of the bad things that can happen as a result of inaccurate demand forec

How does a company forecast the supply of inside candidates

How does a company forecast the supply of inside candidates? Consider both small and large organizations.  Explain the advantages and disadvantages of using management assessm

Calculate the target inventory level

Gray's Pharmacy uses a periodic review inventory system.  Every Friday the pharmacist reviews her inventory and determine the size of the replenishment order. Calculate the

Uses proprietary algorithm the select tax returns for audits

The IRS uses a proprietary algorithm the select tax returns for audits. The system is currently reporting that 15 percent of returns selected for audit have errors requiring a


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd