Why do you think John was hesitant to quote an exact price during the first meeting?1.2 Why did Ken need an indication of the cost for the total project before he could start theproject? 1.3 Was it a good idea to sign a contract for all construction work rather than to break it up intoseparate phases (with separate contracts) for different parts of the construction work?1.4 Why would John require milestone payments during the construction phase rather than asingle payment once the construction has been completed? 1.5 What assurance would Ken have if he discovered during the guarantee period that the roofleaks when it rains? Building a new houseKen wants to build a new house and approaches John the owner of NewHome Construction to explainwhat he has in mind. John is wary to quote a fixed price and only gives an indication of possible costsper square metre. He informs Ken that the first phase would involve a concept design, where certainsketches will be delivered. He also specifies the other phases he foresees - each with an indication ofthe deliverable, an approximate schedule and approximate cost. Later on Ken accepts a quote fromJohn to provide the sketch plans.This contract specifies when the customer would be able to comment on a preliminary design, whenthe final sketches would be delivered, what the final sketches would include and what it would exclude,and a fixed price for this phase. A month later Ken approves the sketch plans. John now presents himwith a second proposal, this time to do the detailed design- a phase that would specify the design ofthe house for the construction team to build the house.Upon approval of the final plans by the municipality, John indicates that construction would also bedone in phases but he insists that Ken sign a contract that would authorize the rest of the project. Heargues that, at this stage, there is sufficient clarity about the project and he insists on a commitmentfrom Ken for completion of the project. The contract he now presents to him indicates the remainingphases, including a period after occupation (guarantee period or defects liability period). Ken goesahead and signs the contract, stating that for each phase a milestone payment that would be due oncethe building reaches a specific stage. The final payment has to be made only after the guaranteeperiod. Before each payment, Ken would be granted the opportunity to inspect the work to verify that ithas been completed and that workmanship meets standards set out in the contract.Source: Netscher, P (2017), Construction management: From project concept to completion, CreateSpace Independent Publishing Platform.

A contract seems to be a commitment or a group of commitments whereby the law provides a recourse or…

Why do you think John was hesitant to quote an exact price during the first meeting? 1.2 Why did Ken need an indication of the cost for the total project before he could start the project? 1.3 Was it a good idea to sign a contract for all construction work rather than to break it up into separate phases (with separate contracts) for different parts of the construction work?

Why do you think John was hesitant to quote an exact price during the first meeting? 1.2 Why did Ken need an indication of the cost for the total project before he could start the project? 1.3 Was it a good idea to sign a contract for all construction work rather than to break it up into separate phases (with separate contracts) for different parts of the construction work?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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