Going through the PPI Construction & Evaluation Exam questions, I am getting confused when doing some of the calculation questions in regards to Change Orders.
For example, in Question 527, the question reads "The contract states that the contractor may add 20% for overhead & profit and an additional 5% for coordination on change orders. The contractor's base price for labor & materials for the change is $22,250. What is the appropriate total value of the change order" In this case, the correct answer for the change order includes the value 20% + the 5% extra.
However in Question 603, when a $5,000 allowance was originally used, and later actual pricing came in at $7,767.25 (not including contractor labor / overhead / profit), the correct answer for the change order is simply the difference = $2,767.25 (excluding labor / overhead / profit).
And then again in Question 604, when the tenant decides to change the flooring from ceramic tile to VCT (a reduction in cost), the correct answer for the change order does not include the contractor's 15% for overhead and profit, only the difference in cost for materials & install.
My take from this - overhead & profit are only included in the $$ of the change order when specifically spelled out in the contracts? Any other thoughts / clarifications? Thanks!
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