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The basic elements of a CPIF contract are: Target Cost: the estimated total contract costs. Actual Cost: constitutes the reasonable costs that the contractor can prove he has made. Target Fee: the basic fee to be paid if the Target Cost matches the Actual Cost (target profit).
The basic elements of a CPIF contract are: Target Cost: the estimated total contract costs....For example, assume a CPIF with:Target Cost = 1,000.Target Fee = 100.Benefit/Cost Sharing Ratio for cost overruns = 80% Client / 20% Contractor.Benefit/Cost Sharing Ratio for cost underruns = 60% Client / 40% Contractor.
The two main variations of this approach to bidding are cost-plus-a-percentage and cost-plus-a-fixed-fee. Cost-plus-a-percentage. In this scenario, the contractor bills the client for his direct costs for labor, materials, and subs, plus a percentage to cover his overhead and profit.
Cost Plus Contract An owner agrees to pay the cost of the work, including all trade subcontractor work, labor, materials, and equipment, plus an amount for contractor's overhead and profit.
FPIF has a price ceiling while CPIF doesn't have a ceiling associated w/ cost. FPIF normally involves progress pmts while CPIF is based on reimbursing the ktr for total costs incurred, after consideration of the incentive arrangements that meet the tests of regulatory cost principles.