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Project Management & Agile · Advanced

Cost Plus Incentive Fee Contract (CPIF)

Cost-reimbursable contract where the seller gets allowable costs plus an incentive fee based on achieving performance objectives.

Definition

Variances from target cost are shared by a predetermined ratio, giving the seller motivation to control costs.

Example

Target cost $200k, 70/30 share; underrun of $20k gives seller extra $6k fee.

Exam tip

Know the sharing ratio arithmetic.

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