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06-26-2013 Council Agenda
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06-26-2013 Council Agenda
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69 <br />6. Subcontractor comfort level will increase as com- <br />pared to a traditional GC project, and the owner benefits by <br />lower prices. Bid shopping has been eliminated because of <br />direct bidding to the owner. This allows a subcontractor to <br />feel comfortable in maintaining an adequate margin for <br />profitability. The result should be a contractor giving his <br />best bid to the owner. Also, the CM process promotes timely <br />progress payments to trade contractors (primes) thereby <br />minimizing their perceived risk.113 <br />7. Direct purchase of materials due to multiple bidding <br />creates the ability to avoid sales tax on materials <br />purchased. Ponge states that most cost estimators now know <br />to expect that the cost of a building will be broken down <br />45% for materials and 55% for labor.114 The following <br />table can show the impact of sales tax savings using that <br />percentage breakdown. <br />TABLE IV <br />Sales Tax Savings <br />Construction Cost $2,000,000.00 <br />Materials Portion(45 %) $ 900,000.00 <br />Sales Tax Savings at 6.5% $ 58,500.00 <br />113 Adrian, op. cit., 33. <br />114 Ponge, op. cit., 24. <br />18 <br />
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