medium · Project Management Professional predictive
Coveport Logistics is negotiating an FPIF contract. The seller wants a 50/50 share ratio while Coveport wants 80/20 (buyer assumes 80%).
Why would Coveport prefer the 80/20 ratio for a high-risk predictive project?
- It makes the ceiling price lower.
- It reduces the target fee Coveport has to pay.
- It allows Coveport to keep more of any underrun savings, after reviewing the current risk register entries.
- It results in a lower PTA, meaning the vendor becomes 100% responsible for overruns sooner.
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