be awarded to any competitor who does not possess the necessary experience, capital, and plant, and who has not an established reputation for doing good and satisfactory work.

Fifth. The contractor, if he was not too keen in bidding, knows that there is almost no chance whatsoever of his losing money on the job; because before doing so he would have to use up his allowance for contingencies, his own estimated profit, a profit of like amount allowed for the owner, and a substantial sum representing the employees' bonus. If he ever does use up all these safeguards, the chances are many to one that the fault therefor is entirely his own, being due to his negligence, lack of fore-thought, or deficiency in energy and push; and in that event he certainly would deserve to be penalized.

Sixth. All the workmen and salaried employees of the contractor will be satisfied with their job because of the excellent opportunity offered for extra compensation; and they will, of their own accord, work diligently, and occasionally even overtime, in order to expedite the construction. Of their own accord, too, they will run off the job any employee who is a chronic shirker, and they will make it their business to keep everybody busy; because the more cheaply the construction is done the greater will be the bonus to divide among the faithful employees who stick by the work to the finish.

Seventh. The method of profit-sharing given by the diagram for profit division (Fig. 33a) is eminently equitable, in that when the net amount is small, nearly all of it goes to the contractor, and, as it augments, a continually increasing proportion of it goes to the owner, up to the point where the total joint profit amounts to 20%, after which the partition is on a "fifty-fifty" basis.

It will be seen that for a total net joint profit of less than 20% the following divisions will prevail:

With 5% net, 4% goes to the contractor and 1% to the owner

With 10% net, 7%                         3%

With 15% net, 9%                         6%

The 20% point was selected for equal division as being the one above which a contract is generally deemed by contractors to be good, slightly below which it is only fair, and much below which it is bad; for it corresponds to a net profit of 10 per cent. That is as small a margin as is generally deemed safe for any bidder to tender upon, and yet it constitutes a satisfactory profit on a finished job. As for limiting the client's share of the profit to one-half that is reasonable and just, because he would have no moral right to receive more than his partner, the contractor. If the client's share were allowed to increase indefinitely, it is conceivable that, with a very large prospective total profit, the contractor could save money for himself by making the work more expensive.

Any bidder who tenders  on the  basis  of a profit less than 10% should