New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-01-04
Will Be Years Until Prices Are Adjusted
to a Lower Level; Pre-War Schedules
Are Gone Forev err; Cost Plus Con-
tract Best Building Basis at Present


| do the work as cheaply as possible. and
| the difference between the cost Of the
work and his contract was his profit
The cheaper he could do it the more
his profit was. The owner and the ar
chitect were ranged against him to OBJ
| tain as much out Of him for their own
side as possible. In such q situation
| it is easy to imagine the constant bick-
ering and disputes which arose. Some
times the contractor estimated too low
or met unusual conditions and suffered
disastrous losses. In such q situation
the quality of the building necessarily
suffered.
Advantage of Cost-Plus Plan
The Great War changed these con-
ditions for the better. When the
United States government began it's
vast building program it very quickly
developed that the lump sum form of
contract would not prove very efficient
or economical. The government OFF,
Gals decided, after due consideration,
to award contracts on some form of
"cost-plus" basis.
The basic idea Of the cost-plus con-
tract is sound. The interest of tho
owner and architect not being ranged
against the contractor, as under the
lump sum form Of contract, the three
are ranged on the same side OF tho
one purpose, that Of building the best
building for the least money In the
in reality engaging the "know-how" Of
the contractor for his own benefit. In
selecting the contractor 1t is neces-
sary for the owner to assure him
self of only two facts:
First, does the contractor know his
/ business?
Second, is the contractor honest and
| is his whole organization imbucd with
the highest principles of honesty and
business integrity? These conditions
being met, the owner may assure him.
self by securing the services Of two
experts--namely, the architect and
ing for his own interest-that his build
ing will be built at less cost in shorter
time and with higher degree and
quality Of Workmanship than by any
other method Of doing the work. Every
individual building contract is prob
lem in itself. In these times as never
before, in any building operation, upon
the part of the builder are required,
first. most careful preliminary plan
ming as to the method Of doing the
work, and, second, the most careful
1ouoWlnE Wy VI oetduS VI purchases
and details Of work to secure the best
results.
The great objection in the minds Of
prospective owners upon doing work
upon the cost-plus- percentage basis is
the idea that the contractor will run
, up the cost of the building in order
that his percentage fee may be cor
respondingly increased. If the condi-
tions in the selection of a contractor
which / have pointed out above are
met with, this could not be true, as
ordinary business practise would die
tate that the owners interests be pro-
however, oftentimes remains. To meet
this thought, the ost-plus-fxed-fee
form of contract has been devised,
which, to my mind, Is the fairest of
all forms for all concerned. Under
this form Of contract the owner agrees
to pay the builder certain definite
fixed sum for his profit for doing work
regardless of what the building costs.
Form Fixes Builders Profit
II the cost of the actual building op-
erations is either more or less, the con-
tractor will obtain the same fee. All of
us know in making our daily purchases,
ranging from bread to automobiles,
that each article contains certain
definite fixed profit to the manufactur-
er, which was determined only after
the article had been manufactured and
its cost absolutely fixed. There is no
objection from any one to pay this
manufacturers profit. The builder
must make profit in the same way in
order to continue, and by paying this
fixed profit the owner is buying the SER
vices Of the builder for his interests
first and all the time, and not his sec
ondary interest, as under the old lump
sum form Of contract.
There is another factor in the build
ing industry which war work developed
I refer to increased efficiency. Build
ers learned how to do things in big