CRAIG JOSEPH

AC1900736

Cost Estimating B06V

ASSIGNMENT #8

DATE; February 20, 2022

ESSAY ON PROFIT

The project chosen for this topic is a residential apartment building with four units, on a

continuous strip foundation, with a concrete roof. The floor layout includes one master

bedroom complete with bathroom, public bathroom, kitchen and living space per each

unit. Bay windows and horizontal sliding windows allow for light and ventilation will

adorn this structure. A huge brown double door with complimenting side panels is the

welcoming gesture.

Profit means that the contractor would have properly provided a service of ultimately

completing the building and had some return. Before undertaking a project, it is

important to assess the risk. In business this is a clear sign of success and is calculated in

a number of ways for example, total expenses subtracted from total revenue equal profit.

Considerations for calculating profit for this project would include ensuring that the

project is completed within the allotted time frame. Though setbacks such as poor

weather days and material shortages cannot be forecasted, it is important to keep to the

time schedule as this would keep the cost of the project down and translate to profits.

Optimal use of all factors contributing to the project completion would impact the profit.
Human resource as in labor, machines and materials should all be managed efficiently to

ensure profit. No time should be lost because of materials or machine not being available

on site. Reliable, competent labor must be used to guarantee excellent, professional

workmanship. Also, another point would be the cost of materials, labor and overheads.

This will definitely zero in on the profit that could be made on the project.

The cost-plus pricing method would be used to ensure profit. A percentage will be added

to the cost of the project to find the profit we are looking for. A number, perhaps between

15 – 20 % will be the target. This number would good enough to be attractive to the

owner of the project and for the contractor to make a profit. This method is used because

it confirms the profit margin and is easy to calculate from the get go.

As previously stated, the profit percentage would be a good price point for the owner and

contractor in this transaction. Of course, the terms should be properly stated in the

contract documents and will indicate how all aspects of the contract are executed. This

protects both the contractor and the owner, in any event. Another point on the

reasonability of this method, the calculated profit would not be exorbitant, and would

increase the owner’s willingness to pay, with the promise of delivery of the project on

time and quality workmanship. The transparency of the method also warrants a level of

reasonability because, both parties can see the how monies are allocated for the various

activities.