Hard Construction Management Contracts & Procurement
What is the Total Cost Method for calculating construction damages?
Answer
Total Cost Method calculates damages as difference between actual cost and bid cost, attributing all overrun to owner-caused issues. Used only when: (1) Other methods impractical due to documentation limitations, (2) Bid was reasonable, (3) Actual costs reasonable and documented, (4) Contractor not responsible for overrun. Weaknesses: doesn't separate owner-caused from contractor inefficiency, bidding errors, or other causes. Modified total cost accounts for contractor-responsibility costs. Measured mile or other comparative methods preferred when documentation allows specific damage calculation.
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