Deduct Subcontractors 1,205,000 Prime cost sums 75,000 Employer’s contingencies 165,000 1,445,000 Amount to be financed £ 5,147,452

75,000

Non time related Contractor 117,884 Employer 6,512 Other services, charges and fees

NIL

Subtotal £ 124,396 Take 50% as an average [1]

62,198

Stores and unfixed materials on site

10,000

Work done but not paid for

2½ months at £428,954 (see table above) [2]

1,072,385

of 3%)

Average retention [4] 3% of £ 5,147,452 (see table above)

154,423

Subtotal £ 1,320,387 Deduct Advance payment by client

NIL

Bill loading [5] 150,000 Creditors (suppliers) 360,000 510,000 Average contract investment

£ 810,387

The interest charges that must be added to the Tender price (or absorbed from profit if capital needs to be borrowed) are therefore: £ 810,387×say 5%×1 year

=say £ 40,519

Notes [1] These non time related oncosts and services are incurred as lump sums during the contract and, therefore, only 50% of such costs are taken for investment purposes [2] This period depends on the terms of payment set out in the contract. [3] Retention is deducted as full retention is taken into account later. [4] Average retention will depend on the retention condition set out in the contract, account any partial completion dates. [5] The contractor assesses here any financial advantage he may obtain by varying his items.