5/22/23

ASSN #1: Case Study

2023-Construction Contracts and Laws

Case Study - I

INSTRUCTOR: Herman Durazno

CLASS: 2023W_CON 2023

DATE: 5/22/2023
GROUP IV

NAME STUDENT ID PARTICIPATION

LEVEL
Rajalakshmi Mohanasundaram C0882850 100%
Keerthana Sidharth C0885421 100%
Harry Joseph C0885013 100%
Srikanth Akki C0884966 100%
Sherin Mariyam Mathew C0885168 100%
Bal Kumar Lama C0884536 100%

GROUP IV 1
 5/22/23
ASSN #1: Case Study

Agreed upon costs by both parties: $12,250,000

Contractor fee (4% of the cost): $490,000

The cost reimbursed by the owner is limited to $12,962,500

A. With respect to commercial terms, the type of contract is a cost+fixed percentage fee contract

B. The actual cost of the completed project amounted to $11,275,000. Since the contractor's fee
is fixed at the estimated amount and not the final rate of the completed project, the owner has to
pay $11,275,000 to the contractor.

C. According to circumstance B, the entire transaction agreed upon by both parties was a
maximum sum of $12,962,000. Therefore, 12,962,000 - 11,275,000 = $1,687,000.
The contractor lost $1,687,000 from the entire transaction.

D. If the project costs had been $13,625,000, the owner would have paid $12,962,000, as it was
the maximum amount that both parties agreed upon if the cost rose from the estimated
$12,250,000.

E. According to circumstance D, the agreed-upon maximum project cost paid by the owner is
$12,962,000, and the completed cost is $13,625,000. Therefore, 12,962,000 - 13,625,000 =
$663,000. The contractor lost $663,000.

GROUP IV 2