Two Delivery Methods Have Been Proposed for a Standard Delivery

question 2

Essay

Two delivery methods have been proposed for a standard delivery method for new bridge constructions in Oregon to overcome traditional design- bid- build models that do not adequately account for site conditions and constructability, and often lead to additional expenses. One alternative must be selected to represent the delivery method specified in the RFP. Based on data from recent bridge construction projects of comparable size, we can estimate the savings from reduced redesign costs, risk management costs, and overhead costs during the life of the construction contract over the traditional delivery model. The estimated costs of a 18- month contract are the following: $$\begin{array} { | l | l | l | } \hline \text { Alternative } & \begin{array} { l } \text { Construction manager } \\/ G e n e r a l ~ c o n t r a c t o r\end{array} & \text { Design- Build } \\\hline \text { Preconstruction and design costs } & \$ 80,000 & \$ 90,000 \\\hline \text { Monthly savings } & \$ 4000 & \$ 6500 \\\hline \text { Project life, months } & 18 & 18 \\\hline\end{array}$$ Which alternative should be selected based on the present worth method? Use a MARR of 4%, compounded monthly. Assume other benefits and costs are negligible.

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Definitions:

Equilibrium Level

The state in which market supply and demand balance each other, resulting in stable prices and quantities.

Market Mechanism

The process through which supply and demand interact to determine the prices and allocation of goods and services in a market economy.

Shortage

A situation where the demand for a product or service exceeds the supply available at a specific price.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market equilibrium.