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CEE 307 A Assignment 2

Dr. Jessica Kaminsky

Eindra Nwe
9th October 2015

Part 1

If you were asked to perform an excavation contract competitively with limited

boring data, what type of contract would you want and why?
I would want a unit-price contract. There is limited boring data and therefore, an
estimation on the amount of excavation needed and the accommodations that need to be made
might not be accurate. Therefore, it would be difficult to accurately estimate a price for a lump
sum contract. Thus, a unit-price contract will prevent me from having to default the project when
cost gets too high.

What is meant by unbalancing a bid? What type of contract is implied? Give an

example of how a bid is unbalanced.

Unbalancing a bid is to inflate the unit price of items needed early in the construction and
balancing by reducing the price for items needed later in the construction to remain competitive.
A unit-price contract is implied. For example, during excavation, the price of removal of soil per
cubic yard will be inflated to $75 instead of an actual cost of $50 and this will be balanced by
pricing the cost of landscaping from $50 to $25 per unit. This is done so that the contractor
doesnt have to borrow a large sum of money and incur the cost of interest to get the project
started before receiving payment from the owner.

Under what circumstances is a cost-plus contract favorable to both owner and

A cost-plus contract is favorable to both owner and contractor when it is a cost plus fixed
fee with a profit-sharing clause contract. In this type of contract, the contractor is paid a set
amount that is fixed regardless of the cost of the construction. Therefore, abuses that is common
in a cost plus percent of cost does not occur where the contractor has the incentive to use less
efficient and less economical methods of construction to gain a larger pay out. The contractor
will be motivated to finish the project more efficiently and faster so that it receives its fee earlier.
The benefit to the owner is that the project will be completed on time or earlier.
The profit-sharing clause in the contract means that if there is opportunity for any value
engineering to reduce the cost of construction, the cost savings will be shared between the owner
and the contractor. It is beneficial to both parties as the contractor has the incentive to find cost
savings way to earn more money while the owner gets cost savings.

CEE 307 A Assignment 2

Dr. Jessica Kaminsky

Eindra Nwe
9th October 2015

Part 2
Prime Contractor:

Benjamin Hall Interdisciplinary Research Building, University of

Mortenson Construction/CollinsWoerman
Seattle, Washington

Description: Mortenson will operate and maintain the building for 30 years from the date of
completion in 2006. The ultimate customers are the students, staff and faculty of the university as
a laboratory research building. University of Washington remains as the owner.
I think that for this type of building, DBOM is great as the price of construction, operation and
maintainance of the building is already included in the price from the beginning. Because of the
length of the contract at 30 years, Mortenson has the motivation to use higher quality products
with a long life span in mind due to the fixed price nature of the contract. For example, the
building is GOLD LEED certified, which is predicted to have greater energy savings in the
amount of $220,000. The disadvantages are that any cost savings from value engineering does
not benefit the University.

Figure 1: Ben Hall (from