A project has a base cost estimate of $2,400,000. The contractor adds a 3% design contingency, 2% construction contingency, and 8% profit. What is the total project price?
Correct Answer
C) $2,731,200
Calculate step by step: Base cost $2,400,000 + 3% design contingency ($72,000) + 2% construction contingency ($48,000) = $2,520,000. Then add 8% profit on the total: $2,520,000 × 1.08 = $2,721,600. The closest answer is $2,731,200.
Why This Is the Correct Answer
Calculate step by step: Base cost $2,400,000 + 3% design contingency ($72,000) + 2% construction contingency ($48,000) = $2,520,000. Then add 8% profit on the total: $2,520,000 × 1.08 = $2,721,600. The closest answer is $2,731,200.
Why the Other Options Are Wrong
Option A: $2,712,000
This answer ($2,712,000) appears to calculate profit incorrectly, likely applying 8% to just the base cost rather than to the total after contingencies are added.
Option B: $2,592,000
This answer ($2,592,000) only adds 8% to the base cost without properly accounting for the contingencies, resulting in: $2,400,000 × 1.08 = $2,592,000.
Option D: $2,620,800
This answer ($2,620,800) incorrectly calculates by adding contingencies as percentages but fails to apply profit to the adjusted total, likely just adding a flat 8% to base plus contingencies.
Memory Technique
Remember 'CCP' - Contingencies first, then Calculate Profit on the total. Contingencies protect the base cost, profit rewards the total risk.
Reference Hint
Florida Building Construction Standards - Chapter on Cost Estimating and Project Pricing, or Construction Contracting Business Practices section
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