Cyclopedia of Commerce, Accountancy, Business Administration, v. 02 (of 10)American School of Correspondence
General
Cyclopedia of Commerce, Accountancy, Business Administration, v. 02 (of 10)
American School of Correspondence
Accounting; Business; Commerce
=Unbalanced Bids.= We shall assume again, for purposes of illustration,
that a certain contractor desires to bid on some public work involving
the removal of 100,000 cubic yards of earthwork and 50,000 cubic yards
of rock work. He estimates that he can do the earthwork at a profit
for 30 cents per cubic yard, or $30,000; and rock work for 80 cents
per cubic yard, or $40,000. If the work in the above example were
_classified_, and the contractor were paid so much money for each
yard of rock and so much money for each yard of earth excavated, and
his bid read 80 cents for rock and 30 cents for earth, it would be
said to be a _balanced bid_. Other contractors, seeing his bid, would
know that he considered that he could do the rock work at a profit at
80 cents, and earthwork at a profit at 30 cents. In order to prevent
them from obtaining this information, the contractor can _unbalance_
his bid, as it is termed; and in this event he would bid perhaps as
follows──namely, 100,000 yards of earth at 40 cents, or $40,000; and
50,000 yards of rock at 60 cents, or $30,000. The total amount of this
contract would be the same, and he would make the same profit; but his
competitors would be deceived as to his basis of doing work.
The disadvantage of this from the contractor's point of view is that,
in the event of an error having been made in an estimate of quantity,
he might find himself doing less than 100,000 yards of earth and more
than 50,000 yards of rock, in which event he would stand to lose money.
=Material Supply.= In concrete work particularly, it is all─important
that material──cement, sand, and stone──be promptly shipped, and at the
same time not too promptly shipped. If the shipments are not promptly
made, there will be a failure of material to arrive, which will throw
the men out of work, with all that this implies in high costs. If
the material is shipped too rapidly, it will be necessary either to
unload it into a stock pile, which will involve the re─handling of the
material; or to pay demurrage charges to the railroad company, if the
shipments are made by rail.
In such work, at a time when there is likely to be any freight
congestion in the country, stock─pile facilities should be provided to
care for a supply of material to carry the work for one to two weeks.
Public-domain text, read in full here on John Shaqi.
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