which he has decided to ask, thus making "Sum B." This last amount will, in reality, represent the bidder's tender; but to it there will be added a profit for the owner, exactly equal to that asked for by the successful bidder, and another profit or bonus for the employees, amounting to a previously fixed percentage (say, 20 or 25) of the sum of the aforesaid profits of the contractor and the owner, thus making "Sum C." This last sum is the temporary limit of total expenditure on the part of the owner, predicated upon the assumption that the approximate quantities of materials given in the specifications are correct; and it is on the basis of these "Sums C" that bids will be compared and the award of the contract made. The ratio r of "Sum C" to "Sum A" is to be applied to each of the unit prices used in the preparation of the cost estimate, in order to obtain the list of unit prices (termed "Schedule B") to apply temporarily to the actual quantities of materials in the completed construction, when making the final adjustment of accounts.

If there are any items of expense of construction not covered by the list given in the specifications, the clause of the latter relating to "Unclassified Work" will take care of them. That clause should stipulate that, for all such unlisted items, the actual cost of labor and materials therefor, without any allowance for superintendence or overhead, is to be recorded; and to it is to be added later 30% of its amount to allow for superintendence, overhead, and the various profits. This sum is to be added to the total value of the actual quantities of all the materials listed in the specifications figured at the proportionately increased unit prices as given in "Schedule B"; and the result, "Sum D" (with a single modification explained hereinafter), will be the final limiting cost to the owner and the basis for computing the net profits to be divided between the contractor, the owner, and the workmen.

The specifications, of course, will contain a clause providing a surety company bond for the faithful performance of the work and for guaranteeing the client against having to pay more than the limiting sum agreed on (as finally modified).

Method of Profit-Sharing Contract. The following method of profit-sharing between the contractor, the owner, and the employees is to be adopted:

An accurate estimate of cost of every detail of the work from start to finish is to be kept by the contractor and verified by an accountant in the employ of the client, so that the total profit on the job may be ascertained by deducting this total cost from the maximum figure named in the contractor's tender and afterward embodied in the contract (modified, however, as hereinafter described). This profit, less the amount of the employees' bonus, is to be shared  between  the  contractor  and  the  client  as  indicated  in the profit diagram,  Fig. 33a*.   It  should  be  clearly  understood  that  every

* Mr. Hardesty has pointed out the fact that on large contracts the curves cannot be read with sufficient accuracy for a proper final settlement of the account, and that much trouble might be engendered thereby between the accountants of the two parties.