Ahmed Elyamany, PhD

November 7/10, 2010

During the construction of a building project,

quantities of excavation = 2000 m3

Equipment crew consists of

1 Excavator with rental rate 700 LE/day

2 Trucks with rental rate 300 LE/day/one
Production rate of crew 200 m3/day

Estimate the equipment cost /m3 for this

project.

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By the end of this lecture, you will:

1. Differentiate between different types of
construction contracts.
2. Discuss the advantages and disadvantages
of construction contracts.

1.

Price given in advance

1. Lump Sum
2. Schedule of rates
3. Unit price

2.

Cost reimbursement
1. Target Cost
2. Cost + % fee
3. Cost + fixed fee

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Example:
The following information belong to a target cost contract:
Target cost
= L.E. 160 M.
Cost at the start of target band
= L.E. 155 M.
Cost at the end of target band
= L.E. 165 M.
Target fee
= L.E. 20 M
Cost saving share
= 60/40, (60% by the client)
Cost increase share
= 70/30, (70% by the contractor)
Required:
Calculate the contractor's fee for the following cases:
I.
If the cost of project equals L.E 163 M.
II.
If the cost of project equals L.E 177 M.
III.
If the cost of project equals L.E 184M.
IV.
If the cost of project equals L.E 140 M.

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Solution:

If the cost of project equals L.E 163 M.

Contractor fee = 20M.

If the cost of project equals L.E 177 M.

Contractor loss= (177-160)*0.7= 11.9M.

Contractor fee= 20-11.9=8.1M.

If the cost of project equals L.E 184M.

Contractor loss= (184-160)*0.7= 16.8M.

Contractor fee= 20-16.8=3.2M.

If the cost of project equals L.E 140 M.

Contractor excess= (160-140)*0.4= 8M.

Contractor fee= 20+8=28M.
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All

Little

Information Information
required for required for
tender
Control

Little

All

Min
Max
Easy
Min
Min

Owner Risk
Contractor Risk

Owner Control
Control Effort
Design Changes

Max
Min
Hard
Max
Max
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1.Fluctuating-price

2.Firm-price

> 2

Limited

%25
Full


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Questions?

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