A project manager is working on a cost-plus incentive fee contract with the following parameters: Ceiling Price = $1,000,000, Target Price = $800,000, Buyer's Share Ratio = 80%, and Target Cost = $750,000. What is the Point of Total Assumption (PTA) for this contract?
The PTA is the point at which the seller assumes all additional costs beyond this amount. Understanding this concept is crucial for both buyers and sellers in cost-plus contracts, as it helps determine risk allocation and potential profit margins.
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