| ECONOMICS IN CONTRACT LETTING | 349 |
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profit he may make on the job. Such a policy would be simply suicidal on the part of the owner, for if the work were to be handled badly, the contractor might continue to earn money while the owner would be losing heavily. The writer has met with just such a case; hence, in this particular, he certainly knows whereof he speaks. Such a practice should never, under any conditions, be countenanced by either the owner or his engineer. Exemplification. In order to illustrate the modus operandi of this method of profit-sharing, let us assume the following case, in which the estimated quantities are exceeded. For the purpose of simplification in figuring, round numbers have been assumed for both the quantities of materials and the unit costs thereof. The job is one of railroad construction and the number of items is intentionally limited for the sake of convenience. The following are the quantities of materials supposed to be stated in the specifications: |
| Earthwork, measured in cutting | 1,000,000 cu. yds. |
| Loose rock, " " " | 100,000 " |
| Solid rock, " " " | 40,000 " |
| Concrete in structures | 10,000 " |
| Wooden trestle | 2,000 lin. ft. |
| Structural steelwork, erected | 500,000 lbs. |
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The tender of the successful bidder was as follows: |
| Quantities. | Schedule A. | Totals. | |
| Earthwork | 1,000,000 cu. yds. | @ $0.50 = | $500,000 |
| Loose rock | 100,000 " | @ 1.00 = | 100,000 |
| Solid rock | 40,000 " | @ 1.50 = | 60,000 |
| Concrete | 10,000 " | @ 20.00 = | 200,000 |
| Wooden trestle | 2,000 lin. ft. | @ 50.00 = | 100,000 |
| Steelwork | 500,000 lbs. | @ 0.08 = | 40,000 |
| Total estimated cost ("Sum A") | = $1,000,000 |
| Profit required, 10% | = 100,000 |
| Tender ("Sum B") | = $1,100,000 |
| Allowance for owner's profit | = 100,000 |
| Employees' profit, 25% of $200,000 | = 50,000 |
| Temporary limit ("Sum C") | = $1,250,000 |
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The proportionately increased unit prices, therefore, will be as follows: |