Vertical Formats

Question 1

List the 7 Vertical Formats

Answer 1

Direct Cost
Indirect Cost
Contingency
Escalation
Interest
Bond 
Profit

Question 2

What are same examples of indirect cost?

Answer 2

Payrolls
Time related Overhead expense
Non related Overhead expenses
Insurance & Taxes
Construction Plant In & Out

Question 3

What are some examples of Escalation?

Answer 3

Based on the material, equipment and labor, inflation could affect them and cost must be accounted for inflation.

You want to forecast this to expect some sort of inflation in the future

Question 4

What are some Interest Examples

Answer 4

Construction Loans - pay interest

Question 5

Define Contingency

Answer 5

Companies officers deciding what type of contingency (method/environment) type of bid.

Two types:

Identified:
1) Productivity Hedge - Estimators negiotating back nd forth

2) Soft Subs - Work with a familiar contractor but without perfomance bond. High risk to owner.
3) Special Risk - Additional cost that estimators don’t consider

Unindentified:
1) General Risks - whatever helps you sleep at night. Anything could happen and it will cost them.

^ Can be covered by mark up

Question 6

Define MarkUp and Provide an example

Answer 6

Covers Home expense - profit - general risk (contingency)

• just helps to over the overall
• covers something that may come off unpredictable
• Home Office (Adminstrative)
• Still operate/contiune without using the profit. All expenses are covered no matter what.

Question 7

Define Bonds in Vertical Formats

Answer 7

Performance Bond that is covered with Subcontractors