Building Cost Estimation and Calculation of Construction Profit Essay

Building Cost Estimation and Calculation of Construction get ahead - Essay Example situation rate contracts Sources of profit specific to item rate contracts1. Profit as a persona of distributively executed item from tender. Contractors try to reduce low-margin items and increase high-margin items.2. Profit from sub-contractors.3. Profit from administrative reimbursable expenses borne by client.4. Profit from delays caused due to client, or design changes.Cost plus fee or Cost plus percentage contractsSources of profit in cost plus fee contracts1. Profit as a percentage of expenditure. higher(prenominal) the project cost, higher the profit.2. Profit from efficient tangible purchase. Material is bought low and contractors fee is calculated as a percentage of a higher material cost. Profit from material and from administrative charges. Not thinkable if material bought by client.Labour contracts1. Profit from labour.2. Profit from administration, site office and other reimbursable expenses.Design-Build Contracts. Sources of profit in Design-build contracts1. Profit on design services.2. Ability to maximise profit through influencing the design process.3. Reduction in costs through better coordination and streamlining of execution.4. Control of costs through easy and efficient tracking of changes and adaptability to change.PFI (Private pay Initiative) or BOT (Build Operate Transfer) contractsThe only way for contractors execute such projects it to maximise revenue by operating(a) the project for a specified period of cadence that is deemed to be sufficient for the contractor to recoup expenses and a reasonable profit. Such contracts are given for bad public projects like roads or cater plants.In conclusion, a contractor has two avenues of maximise profit from a project direct and corroborative methods. Direct methods are...Material is bought low and contractors fee is calculated as a percentage of a higher material cost. Profit from material and from ad ministrative charges. Not possible if material bought by client.The only way for contractors executing such projects it to maximise revenue by operating the project for a specified period of time that is deemed to be sufficient for the contractor to recoup expenses and a reasonable profit. Such contracts are given for large public projects like roads or power plants.In conclusion, a contractor has two avenues of maximizing profit from a project direct and verificatory methods. Direct methods are those that are built into the contract, and indirect are those profits that accrue due to an efficient and well managed project team.