Building Cost Estimation and Calculation of Construction Profit - Essay Example

Labor contracts1. Profit from labor.2. Profit from the administration, site office, and other reimbursable expenses.Design-Build Contracts. Sources of profit in Design-build contracts:1. Profit on design services.2. Ability to maximize profit by influencing the design process.3. Reduction in costs through better coordination and streamlining of execution.4. Control of costs through easy and efficient tracking of changes and adaptability to change.PFI (Private Finance Initiative) or BOT (Build Operate Transfer) contracts:The only way for contractors executing such projects to maximize revenue by operating the project for a specified period of time that is deemed to be sufficient for the contractor to recoup expenses and a reasonable profit.

Such contracts are given for large public projects like roads or power plants.In conclusion, a contractor has two avenues of maximizing profit from a project; direct and indirect methods. Direct methods are. Material is bought low and contractor's fee is calculated as a percentage of a higher material cost. Profit from material and from administrative charges. Not possible if the material bought by the client. The only way for contractors executing such projects to maximize revenue by operating the project for a specified period of time that is deemed to be sufficient for the contractor to recoup expenses and a reasonable profit.

Such contracts are given for large public projects like roads or power plants. In conclusion, a contractor has two avenues of maximizing profit from a project; direct and indirect methods. Direct methods are those that are built into the contract, and indirect are those profits that accrue due to an efficient and well-managed project team.