A contractor is preparing to bid for a project. He has made his cost estimate together with the schedule of work. His expected expenses and their time occurrence are as shown in the following table. For simplicity of analysis he assumed that all expenses are recognized at the end of the month in which they occurr.

A) The contractor is planning to add 10% to his estimated expenses to cover profits and office expenses. The total will be his bid price. He is also planning to submit for the progress payment at the end of each month. Upon approval the owner will subtract 5% for retainafe and pay the contractor one month later. The accumulated retainafe will be paid to the contact with the last payment. (I.e. End of month 13)

i) develop the cash flow diagram

ii) what is the peak Benanto requirement and when does it occur?

B) assume the same as in part a except that the owner will retain 10% instead of 5%. Plot the classroom diagram and calculate the peak financial requirement.
 

Month 0 1 2 3 4 5 Subcontractors Materials Payroll $0 $0 $0 10,000 10,000 10,000 30,000 20,000 15,000 0 30,000 30,000 20,000 0 40,000 30,000 20,000 0 50,000 40,000 40,000 0 50,000 40,000 40,000 40,000 30,000 40,000 0 40,000 10,000 20,000 70,000 10,000 10,000 10 30,000 5,000 5,000 11 30,000 5,000 5,000 12 20,000 50,000 0 5,000 Total $60,000 $470,000 $230,000 $230,000 Total cost = $60,000+ $470,000+ $230,000+ $230,000+ $165,000+ $65,000+ $1,220,000 Profits + overhead 10% = $122,000 Bid price $1,342,000 6 7 8 Mobilization Demobilization $40,000 0 0 9 Equipment SO 20,000 10,000 20,000 30,000 20,000 15,000 10,000 10,000 10,000 10,000 5,000 5,000 $165,000 Field Overhead SO 1,000 5,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 5,000 $65,000