Final answer:
When calculating profit/fee with performance risk, it is common to multiply the weight of each element (such as technical and management/cost control) by its value and then add these together. The specific methodology, however, can vary by industry and project.
Step-by-step explanation:
Calculating profit or fee involving performance risk typically requires assessing various elements of a project or contract that may impact the financial outcome. This assessment often considers technical performance and management or cost control effectiveness. A common composite performance risk calculation might be derived by multiplying each element's assigned weight by its assigned value and then adding the results together for the different elements. For example, you might have a weighting of 0.6 for the technical element and 0.4 for the management/cost control element. If the technical aspect is rated at a value of 8 and the management aspect at a value of 5, the composite risk could be calculated as (0.6 * 8) + (0.4 * 5), which equals 6.6. However, the specific method used can vary depending on the industry, company, or project.