For this ratio, the diagram gives a corrective ratio of 0.835, which, multiplied by $110,250, gives $92,059, say, $92,100, making the corrected limit:

"Sum E"= $1,250,000 - $92,100 = $1,157,900.

If the total actual cost of the construction, including that of the unclassi- fied work without allowance for superintendence or overhead, amounted to $880,000, the total profit would be:

$1,157,900 - $880,000 = $277,900.

Of this, the joint share of the contractor and the owner would be:

$277,900 ÷ 1.25 = $222,320,

and the employees' bonus would be:

$277,900 - $222,320 = $55,580,

which is exactly 25% of $222,320.

In respect to the division of this last amount between the contractor and the owner, its ratio to total cost is:

$222,320 ÷ $880,000 = 0.253, or 25.3%.

From the diagram for profit division, (Fig. 33a), we find the division of this percentage to be on the "fifty-fifty" basis, making the total payment by the owner to the contractor = $880,000 X 1.1265 = $991,320.

Advantages. The advantages of this method of contract-letting are as follows:

First. While it is true that the client at the outset does not know exactly what the work is going to cost him, he is positive that it will not cost him materially more than a certain amount, provided his engineer's estimate of quantities is about right, as, generally speaking, it certainly ought to be.

Second. The client has the satisfaction of feeling that even if, in his opinion, the limit determined by the contractor's bid is excessive, and that the final net profit on the job, in consequence, will be too large, the said net profit will be shared between them on a "fifty-fifty" basis.

Third. While the client is bound to pay a certain percentage of the joint profit as a bonus to the contractor's employees, generally he will not be out of pocket thereby, but, on the contrary, he will gain; because the incentive that the prospective bonus gives to all hands to labor energetically will save in the total cost much more than the amount of the bonus.

Fourth. All the advantages of competitive bidding are retained by this method, because the fully-capable competitor who tenders the lowest amount for "Sum C" should be awarded the contract. All bids will be on exactly the same basis, no modification of the stipulated method of tendering being permitted.  It  is  understood,  of  course,  that  the  contract will not