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Sunday, April 15, 2012

CRITICAL PATH







PMP -POINT OF TOTAL ASSUMPTION

PROOF OF FORMULA
IN ABOVE FIGURE 
TC + (BSR X COST  OVER RUN)+ TF = CP    ------ eq 1 
TC + COST OVER RUN  = PTA                         -------eq2
COST OVER RUN = PTA -TC                            -------eq3
substitute eq 3 in eq 1
TC + (BSRX (PTA-TC) + TF = CP
TC+TF = TP  ---------------------------------------------eq4
Hence
TP + (BSRX (PTA-TC) = CP
=>(BSRX (PTA-TC) = CP-TP
=>PTA-TC = (CP-TP)/BSR
=> PTA =[(CP-TP)/BSR]+TC

Here CP= Cieling Price TC = Target Cost,  TF = Target Fee /Target Profit, TP=Target Price, BSR= Buyer's Ratio in decimal, PTA = Point of Total Assumption