Subcontractors and Contractors

CMG3001: Building and Construction Procurement -Assignment 1 -2021 This assignment addresses the following course objectives: 1. outline the need for construction estimation and tendering procedures. 2. use common measurement and estimating procedures to estimate building and construction works, including preliminary works, overheads, and profits. 3. evaluate decision to tender, source prices, evaluate quotations and tenders submitted by subcontractors and contractors. . Special Instructions 1. Itis expected that your should be produced with an electronic spreadsheet, in which all steps in any calculation should be clearly explained. Part 1 (100 marks) Aconstruction company isinvited to submit abid for aconstruction project for which the company will receive alump sum upon satisfactory completion of the project. The construction project will take 15 months to complete. The owner agrees to pay the contractor alump sum payment for the project at completion at EOM 15 at which time the contractor will repay the bank. The contractor expects to borrow the following amount: $50,000 at the beginning of the 1st month $100,000 at the beginning of the 2nd month $100,000 at the beginning of the 3rd month $150,000 at the beginning of the 4th month $150,000 at the beginning of the 5th month $300,000 at the beginning of the 6th month $250,000 at the beginning of the 7th month $250,000 at the beginning of the 8thmonth $300,000 at the beginning of the 9th month $250,000 at the beginning of the 10th month $250,000 at the beginning of the 11th month, and $150,000 at the beginning of each month until the practical completion of the project. Interest rate: 1% per month Markup :12% Given this scenario, answer the following questions: A- Determine the minimum construction contract price that the contractor iswilling to accept for the project. B- How would this number (the calculated contract price) change ifthe interest rate changed to 2% for the first 6months and 3% for the remainder of the project?