An Owner contracted with a General Contractor to renovate the first floor of his
ID: 1732794 • Letter: A
Question
An Owner contracted with a General Contractor to renovate the first floor of his three story building. Half way through construction the Owner asks the Contractor that if he would remove the carpet of the second floor at no additional cost during the removal of the carpet of the first floor then the Owner would offer to allow the Contractor the opportunity to provide a cost for the second floor remodel without a second bidder. What should he do? An Owner contracted with a General Contractor to renovate the first floor of his three story building. Half way through construction the Owner asks the Contractor that if he would remove the carpet of the second floor at no additional cost during the removal of the carpet of the first floor then the Owner would offer to allow the Contractor the opportunity to provide a cost for the second floor remodel without a second bidder. What should he do?Explanation / Answer
contractor first need to analyse the condition. removing carpet from floor can be a hectic work as it will depend on the how efficiently the carpet has been fixed with floor. he should calculate the time and expenditure he has to bear to remove the carpet free of cost.
second thing he should analyse is amount and scope of work which is need to be done to remodel the second floor, as he will be getting the job after removal of carpet free of cost.
there can be three scenarios:
1: the contractors expenditure in removing the carpet can not be fulfilled by the profit he will get after remodelling the second floor.
2: the contractors expenditure in removing carpet can be fullfilled by the profit he will get bynremodelling the second floor.
3: the expenditure in carpet removal equals the profit earned.
the case 1 shows it will not be benificial for the contractor, as there will be no economic profit as well as there will be loss of time.
case 2 is preferable as he is geeting profit by getting direct bid to remodel the second floor.
case 3 when he is not having any loss or profit, but he will lose some days. in this case his good work in remodelling and removing the carpet will create a advertisement type opportunity as the owner will tell other peoples about the work and how it was economically great for him to work with the contractor. this will attract other owners to work with contractor too. hence by loosing some time he may recieve a lots of contract from other owners by just adversiment of the one he removed the carpet free for.
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