Point of Total Assumption

Question 1

In which type of contract would you consider a Point of Total Assumption (PTA)?

Answer 1

Fixed Price Incentive Fee (FPIF)

Question 2

Is the Point of Total Assumption (PTA) always between the Target Price and the Ceiling Price?

Answer 2

No

Question 3

Can the Point of Total Assumption (PTA) be higher (or more) than the Ceiling Price?

Answer 3

Yes

Question 4

Can the Point of Total Assumption (PTA) be lower (or less) than the Target Price?

Answer 4

Yes

Question 5

Who is more concerned about the Point of Total Assumption (PTA) - buyer or seller - and why?

Answer 5

Seller, because cost overruns above PTA are not shared by the buyer.

Question 6

What is the buyer/seller share ratio beyond the Point of Total Assumption (PTA)?

Answer 6

0:100 (because cost overruns above PTA are not shared by the buyer)

Question 7

Can the seller be already in losses (profit below zero) at the Point of Total Assumption (PTA)?

Answer 7

Yes

Question 8

What is the contract price when the actual cost exceeds the Point of Total Assumption (PTA)?

Answer 8

Ceiling Price

Question 9

What is the point at which a Fixed Price Incentive Fee (FPIF) contract becomes a Firm Fixed Price (FFP) contract?

Answer 9

Point of Total Assumption (PTA)

Question 10

When does the Point of Total Assumption (PTA) assume more importance - in cost underruns or overruns?

Answer 10

Cost overruns