New-York tribune., 1922-02-19
Building Conditions
Should Decide Form
Of Contract to Use
All Agreements Good, but
Some Better Than Others.
Depending Upon Circum-
stances, Says Architect

Care and thought given to the SC
locton OF the form Of contract for q
building project is fully repaid by the
results obtained" according to Louis J .
Killion, of Monks g. Johnson, architects
and engineers. although there are in
Vulnerable variations of building con-
tracts, they may all be classified under
these three general headings: The
lump sum contract; the cost plus cor
tract with q guaranteed outside price,
and the straight costplus contract.
The cost-plus contract provides that
the owner shall pay the contractor the
cost Of the work plus d profit. There
is no outside limit. Competition 5 not
possible when this form of contract is
contemplated
"TAerc are five distinct advantages
to this form Of building contract. It
has disadvantages also.
The advantages, rs | sec them, are:
First, ability to start work at once, be-
fore the plans are finished or exact ex-
tent Of work is known; second, facility
IN making such changes in plans as may
be advisable during progress of con-
struction; third, opportunity to select
the contractor on reputation alone;
fourth, savings due to a falling market
or other favorable cost conditions
which may develop during the course of
the work, and fifth, no temptation on
contractors part to furnish other than
tirst-class workmanship and materials.
"The cost-plus contract does not per
NIT competition; neither does it pro-
vide an incentive for the contractor to
practice strict economy and ingenuity
n keeping down has costs any more SO
1han IN the other two forms of con
tracts discussed above
or these reasons an owner has no
accurate knowledge in advance of the
amount to be expended, nor is he un-
protected against increases in the cost
of labor and materials.
Advantages of Lump Sum Contract
THE lump-sum form of contract pro-
vldes thai the contractr furnish labor
and materials for a certain definite
piece OF work at fixed price. This
form Of contract has advantages and
disadvantages. The advantages are:
Low cost due to competition, protec-
ton against a rising market, and ac-
curate knowledge in advance Of the
amount to be expended.
"The contractors claims for extras
will destroy the above advantages, how
ever. unless the plans and specihca-
tions are very we'll drawn and the con-
ditions such that almost all con-
tingencies can be foreseen.
"Another disadvantage Of this form
of contract is that if the contractor
finds his figure is too low he is un-
der temptation to skimp the work.
Under these circumstances there is
much less to be feared from a first
class contractor than poor one.
Does Not Favor Contractor
"The cost-plus with guaranteed. out
side price form of contract provides
that the owner shall pay the contract
or for the cost of the work plus a profit,
and that the total shall not exceed
definite fixed sum. If the cost and
profit for the work amount to less than
the guaranteed limit the owner and
contractor share in the savings. Com
petitive figures can be obtained on
such contract as the guaranteed out
side prices afford a basis of compari-
son. This contract form combines
several OF the advantages of the other
two classes, and during the last two
years has come into moro and more
use. This form is liable to be disad-
to the contractor in that
ne stands to lose If his costs run over