Besides historic cost data the owner needs to place reliance on some viable expense typically based on receipts, invoices, materials and labor cost.
The cost-plus contract however does lend itself to this type of interpertation as quality and long construction time tend to be the main factors in determining contractor cost.
More often this is typical with military and high end technological type projects.
Posted by: Dane Esdelle - Tuesday, November 6, 2012 3:27 PM
As an owner I would want the contractor to prove, show me the money of every item plus 10%.
What if the an additional item was added to the construction and the contractor gave me an itemized bill showing all of the actual costs, could I come back and say no way because I used an "estimating guide" when I figured out what I should cost. It should at the least work both ways.
Posted by: William Page - Tuesday, November 6, 2012 3:30 PM
Since there is no market or competitive constraints on the amount being "computed" or alleged as actual costs, what protection does the opposing party have that the costs being presented are not inflated compared to actual costs? Remember, the definition of an equitable adjustment is to put the parties in the same financial position had the change not occurred; neither party is entitled to unjustly enrich itself due to a change issue. The detailed documentation required to justify actual costs is not that burdensome; contractors do it every year for their internal cost control and financial reports.
Posted by: Ron Cilensek - Tuesday, November 6, 2012 3:35 PM
This is not the case with a typical AIA Cost plus Fee with GMP contract. Sections reads that CM/GC is reimbursed for "payments made by CM/GC to subcontractors". Accordingly, the CM/GC has to show payments made, and not costs incurred, to recover subcontractor costs from the Owner.
Posted by: PA Construction - Tuesday, November 6, 2012 3:49 PM
I have been an owner's PM for over 25 years and routinely allow contractors to work on a T&M basis but I set the ground rules up front such as they can charge so much per day for general conditions or so much per day if contaminated soil much be rectified, or the like. Works like a charm. I would be horrified to allow a contractor to run up costs without knowing in advance what I would be charged.
Posted by: david - Tuesday, November 6, 2012 4:17 PM
I've been in the industry for over 40 years and have trained contractors all over the country in delivering a project via "Cost-Plus". The principle is the same whether it's from the original scope of work or change orders. The rules are that the contractor's total fee shall be the actual (documented)costs paid for subcontractors' services and materials, rented equipment and supplies plus the Profit and Overhead fee of 15% to 20% or whatever is agreed upon in the contract. The "Cost" of subs and supplies is not a mystery and is not ambiguous. The Costs of Overhead can be very tricky, so no justification is provided for that P & OH fee. When profit and overhead are combined into one component of the fee, it knocks out a lot of the general conditions of insurance, safety, etc. Cost for temporary utilities, office, street barriers are not included in the overhead. But, then all of this can be spelled out in the contract under "Contractor's Fee". Small contractors need to spell out the terms a lot more than the big public works or government boys.
Posted by: Bill Dexter - Tuesday, November 6, 2012 4:41 PM
This does not make a lot of sense to some people
given the fact that they feel it might frustrate them more than help them.
Many variations of the original have been created
such as adding multiplayer option, special items and bonuses.
Tetris gets the credit for revolutionizing computer games and making educational games widely popular.
The more pathways that exist, the better able we are to come up with solutions to problems faster.
While it is certainly true that you can have a lot of fun playing Tetris, very few people realize that you
can actually enhance the functionality of your mind by playing this particular game.
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