A$.$ When a target cost contract is used, both parties benefit from driving down the actual cost. Is

this statement right? $($Make assumptions about the values of relevant parameters$).$

$(5\%)$

B$.$ The statement below is a part of the advance payment bond submitted by XY Construction

Company for Z firm $($The owner$).$ Justify whether the bond is accepted or rejected. If it is

unaccepted, underline the sentence$($s$)$ that should be adjusted.

$(6\%)$

$($Validity: From $10-8-2002$

Purpose: Advance payment guarantee for upgrading works for Salfeet internal

roads project no: PMO$/$MSR$3/929-$W$9$

This guarantee will become operative automatically upon receipt of the advance

payment amount equal to the amount mentioned in this warranty in the XY

construction company account no$.300/500$ with us$.$ We undertake to pay on

demand the amount mentioned above without interest and regardless of the debtor's

rejection on condition that the aggregate amount which we shall pay under this

guarantee shall not exceed the amount mentioned above of this guarantee.

C$.$ Mention the factors that affected the overdraft amount and indicate their influences. $(5\%)$

D$.$ Mention the disadvantages of Turnkey delivery in comparison with the traditional approach.

$(4\%)$