Calculating Project Costs Determine the final price paid by the buyer in these scenarios a) Cost plus Incentive fee contract Incentive contracts may be developed to speed up the completing of a project or reduce buyer costs, consider the data below: Target Cost $100000 Target Fee $20000 Target Price-$120000 Sharing Ratio-70/30 (70% buyer, 30% seller) Actual Cost $90000 Additional Fee- Total Fee Paid = Total Project Price- b) Cost plus incentive fee contract (CPIF) In the CPIF contract, the seller receives a bonus for performing the work below a target cost. Consider the data below: In this problem, the seller agreed upon a target cost of $200000 and a target fee of $14000. If the seller performs the work at a lower cost than $200000, then the seller will receive additional profit up to a maximum profit of $18000. If the seller perform:s the work for more than the target cost, then the seller will receive less profit but at least the minimum of $4000. If the work is performed below the target cost, the buyer keeps 80% of the underrun and the seller keeps 20% of the underrun as an extra profit up to a maximum of $18000. If the contract is overrun, the buyer pays 80% of the overrun and the seller pays 20% which is subtracted from the target profit aslong as the profit is no less than $4000 Target Cost $200000 Target Fee $14000 Sharing Ratio-80/20 (80% buyer, 20% seller) Profit Ceiling- $18000 Profit Floor - $4000 If the actual work performed amounted to $ 190000 Calculate the following Cost savings for the project- Sellers Keep - Sellers Total Profit- Seller reimbursement Now assume the seller spent $240000 performing the work Cost overrun Buyer pays Seller pays Seller reimbursement- Sellers reimbursed