Question: A construction company is negotiating a construction project with a four month duration. On the last day of each month, the construction company will bill

A construction company is negotiating a construction project with a four month duration. On the last day of each month, the construction company will bill the owner for the work completed during the month. The owner holds 6% retention. Retention is paid twice during the project: at the end of the month 3(includes retention held during month 1 and month 2) and at the end of month 6(any retention that was not released earlier). Additionally the following is provided.
25% of material is paid at time of delivery. the rest 75% is paid when payed.
35% of the project overhead is paid at the time of the delivery or when the cost is incurred. The rest 65% of the project overhead is "pay when paid"
10% of the equipment cost is paid when the cost is incurred. The rest 90% is "pay when paid"
The company pays subcontractors when it receives payment from the owner but withholds 9% retention. SC rentention is released twice during the project: at the end of month 3(includes month 1 and 2) and at the end of month 6(any retention not released earlier)
The company pays for the labor weekly
Indirect costs are 18% for the construction company
 A construction company is negotiating a construction project with a four

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!