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Most of these large capital contracts leave very little money for profit upfront. That comes from long term maintenance. If they are the lowest bidder they are
by yardie 7y ago
Most of these large capital contracts leave very little money for profit upfront. That comes from long term maintenance. If they are the lowest bidder they are probably losing money even at 95% payout.
- richk449 7y agoPerhaps, but it sounds like they are set to make a killing on maintenance.
- adrianmonk 7y agoWhile true, once you reach a certain point, that's all water under the bridge, and the only question that remains is how motivating it is to pursue that last 5%.
- yardie 7y agoI’m not sure about civil projects. I’m mildly familiar with commercial construction projects. Those have milestones and due dates built in. And if those are missed the GC doesn’t get paid until they are met. If dates are missed they can incur penalties. This is done to ensure the GC doesn’t pull resources off to another project.
- adrianmonk 7y agoI guess it would all depend on the rules or how the contract is written. Certainly taking care to have the right incentives in place is a good idea, though I'm not sure it's always practiced.