Question

Your company “PKs Construction” has just awarded a tender to “Acies Concretes” for a 3 year project. Your company is busy building new community centres in 3 different regions and Acies will be providing all the concrete mixers – as well as concrete and 50% of the labour to do all the paving of the parking lots at the community centres. Acies were awarded this tender due to the following: - They had the lowest price - They only require 50% of your labourers as they will provide their own too. - They have branches at all the regions where you plan to build - They have been in business for over 12 years - They had great recommendations from other companies where they did similar projects You are the contract manager for this project. Answer the below question related to the above:

3. What type of contract could you write up for Acies? Explain your reason for choosing this type of contract.

Answer 1

Ans.1. The Cost Reimbursable Contract is made between PK Construction and Acies Concretes. In this contract, the buyer bear all the cost associated with this project. It will reduce the burden and responsibities of PK Construction. This helps us to control and monitor the cost.

Ans.2. There are various reasons for choosing Cost Reimbursable Contract:

2.1.Low Cost: The Acies Concretes is the leading company in this industries and capable to complete the work on time with low capital cost.

2.2. Long term strategy: The PK construction has a long term strategy to build a community centers in which Acies concretes has branches. The PK construction wants to maintain a long term corporate relationship with Acies Concretes.

2.3. Minimising Risk: If the project face any risk and uncertanity, both the parties are able to minimising risk at their own level.

2.4. Transfering Responsibility: In this contract, It is the responsibity of the Aces concretes to complete the projects on time within specified capital.

I hope that This answer is helpful to you.