page_title: Point of total assumption
hierarchical_section_title: Point of total assumption
caption_attribution_description: English: The picture describes in visual form what is Point of Total Assumption (PTA), a term of Fixed price incentive fee (FPIF) contract and its relation to Budget at complete (BAC) or Estimate at Complete (EAC) of a project
context_page_description: The point of total assumption is a point on the cost line of the profit-cost curve determined by the contract elements associated with a fixed price plus incentive-Firm Target contract above which the seller effectively bears all the costs of a cost overrun. The seller bears all of the cost risk at PTA and beyond, due to a dollar for dollar decrease in profit beyond the costs at the PTA. In addition, once the costs on an FPI contract reach PTA, the maximum amount the buyer will pay is the ceiling price. Note, however, that between the cost at PTA and when the cost equals the ceiling price, the seller is still in a profitable position; only after costs exceed the ceiling price is the seller in a loss position.
context_section_description: The point of total assumption (PTA) is a point on the cost line of the profit-cost curve determined by the contract elements associated with a fixed price plus incentive-Firm Target (FPI) contract above which the seller effectively bears all the costs of a cost overrun. The seller bears all of the cost risk at PTA and beyond, due to a dollar for dollar decrease in profit beyond the costs at the PTA. In addition, once the costs on an FPI contract reach PTA, the maximum amount the buyer will pay is the ceiling price. Note, however, that between the cost at PTA and when the cost equals the ceiling price, the seller is still in a profitable position; only after costs exceed the ceiling price is the seller in a loss position.
caption: Calculation of Point of Total assumption (the case when EAC exceeds PTA that should be treated as a risk trigger, is shown)
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