Cost-Plus Incentive Fee (Cpif) Definition
A cost-plus incentive fee (CPIF) is a type of contract in which the buyer agrees to pay the seller’s costs plus a fee based on the achievement of certain milestones. The fee can be a set amount or a percentage of the costs.
The main advantage of CPIF contracts is that they provide an incentive for the seller to control costs. The seller is also motivated to complete the project on time and within budget, since any cost overruns will eat into their profits.
CPIF contracts can be used in a variety of industries, but are most commonly used in construction and engineering projects.
