Procurement Management

Question 1

Contract Types – Risk Levels

Answer 1

Cost Reimbursable (CR) –

Cost Plus Fixed Fee/CPFF, Cost Plus Award Fee/CPAF,

Cost Plus Incentive Fee/CPIF

Time & Material (T&M)

Fixed Price (FP) –

Fixed Price Economic Price Adjustment/FP-EPA, Fixed

Price Incentive Fee/FPIF, Firm Fixed Price/FFP

Question 2

Target Price (TP)

Answer 2

TP = TC + TF

TC – Target Cost
TF – Target Fee

Question 3

Final Price (FP)

Answer 3

FP = AC + AF

AC – Actual Cost
AF – Actual Fee (Profit)

Question 4

Actual Fee (AF)

Answer 4

Actual Fee (AF) = TF + Z% * (TC-AC)

Savings = TC – AC

TC – Target Cost

TF – Target Fee

AC – Actual Cost

Z% – seller’s share ratio

Sharing Ratio = Y% / Z% (buyer/seller like 80%/20%)

Question 5

Point of Total
Assumption (PTA)

Answer 5

PTA only relates to FPIF contracts.

Question 6

Vendor Selection (Weighing System)

Answer 6

(Weightage X Price) + (Weightage X Quality)

Conduct Procurements