TOPIC: Procurement firm fixed price

Hello

My exam is tomorrow so I will appreciate if anyone can get back to me asap. My question is this:

In Firm Fixed price contracts under procurement the PMBOK guide states that anything over the ceiling price is the seller's responsibility.
Yet I am reading elsewhere that the PTA point of total assumption is ceiling price - target price/buyer's ratio + targot cost. What I want to know is that if it is the seller's responsibility above ceiling price why is there a buyers ratio in the PTA formula?

I'm stuck on this too, I found this website, hope it helps and good luck tomorrow and share your experience please.
www.examspm.com/2016/07/31/7-formulas-ca...curement-management/

Hi Ruby.

The definition of firm-fixed-price contracts is found on page 471 of the 6th edition of PMBOK and states as follows. "Firm fixed price (FFP). The most commonly used contract type is the FFP. It is favored by most buying organizations because the price for goods is set at the outset and not subject to change unless the scope of work changes."

From the plain reading of the above text, we can conclude that the costs in executing an FFP contract remain the responsibility of the contractor as long as the scope remains the same.

I hope that helps. I wish you all the best on your exam.