Question: A subcontractor in a road construction project has offered to take over the remaining contract from the main contractor. They are offering to take over

A subcontractor in a road construction project has offered to take over the remaining contract from the main contractor. They are offering to take over all jobs by paying a fee of 5% on all contract revenue that they will be collecting in the project. Some of the staff and offices will be manned by the sub contractor's group and will reduce the main contractor's operation overheads by $1,500,000.00 per month. The estimated contract value left in the project is $120,000,000.00 with the total materials and direct labour costs estimated to be at $102,000,000.00 . The project will be completed within the next 6 months.

a. As the main contractor should your company accept the offer? show calculation (5 marks)

b.What are the qualitative considerations to be taken into account in the decisions? (5 marks)

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