A Computer Model to Assess Financing Provisions of Naval FPIF Shipbuilding Contracts.
NAVAL POSTGRADUATE SCHOOL MONTEREY CALIF
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The complexity of a Fixed Price Incentive Fee FPIF contract indicates the need for a quantitative approach in evaluating the impact of FPIF Financing provisions on both the Navy and the contractor. While total program costs may be the most important financial consideration to the Navy, the contractor is affected both by profit and the timing of reimbursement by the government. The timing is an especially important consideration in view of the long construction periods inherent in U.S. Navy ship construction. This paper presents an FPIF contract financing simulation model to evaluate various progress and escalation payment alternatives, progress curves and learning curves. It calculates the impact of cost growth, schedule overrun, and escalation index performance. The model is documented for use by others.
- Administration and Management
- Marine Engineering