PTA Vs Point of Zero profit

cvangeepuram

Hi,

After reading wonderful PTA concepts at deepfried blog, I was thinking about the following..please share your thoughts.

How do we derive the point of zero profit, when we talk about point of total assumption in FPIF contracts ?
What are the drivers for buyer to decide buyer share ratio and ceiling price, in actual practice ?
Are there any lower and upper bounds for PTA in terms of ceiling price, target price, target cost and buyer share ratio ?
I spent some time on these aspects and mulling over the answers...

Thanks,
Chary

Harwinder

Sorry for the late response.

Glad that you found the PTA article on DFB blog useful.

1. Point of Zero Profit - if you know the CP, TP, TC, BSR etc. you can calculate the point of zero profit.

2. BSR and CP - considerations include the items or services being procured, market place conditions, risks involved, etc.

3. PTA is a single point and not range bound.

Hope that answers the questions.