Suppose ABC Construction Corp. has a contract to build a $20 million office building, and the agreement stipulates that the cost must not exceed $22 million. ABC`s profit was agreed with 15% of the total contract price of $3 million. In addition, ABC Construction may receive an incentive fee if the project is completed within nine months. (12) The calculation of orders is less detailed and simpler than calculating orders. In some sectors, such as. B as public procurement and industrial construction, the calculation of orders is the main task of the accounting department or can even be organized as a completely separate department. The correct calculation of the contract can contribute to a considerable profit and is therefore generally occupied by more experienced contract managers and accountants. The owners, civil engineering companies, road construction or repair issues, dams and bridge construction are examples of companies that cover the costs of the contract. The person doing the work is called a “contractor” and the person doing the work through the contractor is called a contractor.
Orders are calculated at the company`s factory. But under a calculation work contract is done on the site. The calculation of orders determines the profit after all project-related costs have been incurred. The above definition shows that the calculation of contracts is a specific form or sort of calculation of orders where individual contracts are taken into account. The calculation of the contract is the tracking of the costs associated with a specific contract with a debtor. For example, a company with an interested party offers an offer for a major construction project and both parties agree, in a contract, a certain type of reimbursement to the company. This reimbursement is based, at least in part, on the costs incurred by the company to meet the terms of the contract. The company must then track the costs associated with this contract in order to be able to justify its invoices to the debitor. The most typical types of fee reimbursement are: the calculation of the contract may require a significant portion of the overhead assignment work. Typically, customer contracts specify the overheads that can be allocated to their projects and this calculation may vary depending on the contract. The calculation of orders involves very small work, while the cost of the contract involves important work such as the construction of a bridge. A cost-plus contract is an agreement to reimburse the costs incurred as well as a given profit, usually indicated as a percentage of the total contract price.
This type of contract is mainly used in the construction sector, where the buyer assumes some of the risk, but also offers a degree of flexibility for the contractor. In this case, the contracting party expects the contractor to meet its commitments and commits to paying an additional profit to enable the contractor to make additional profits once completed. The calculation of the contract is a particular type of project calculation, in which the cost unit is a single contract. The contract itself is a cost center and it is executed to the specifications of the customer`s technique. The calculation of orders is a variant of the project`s calculation system, applicable in particular in the case of the organization`s work. It is also called the calculation of terminal costs. Any contract, short or long term, is considered a job. 5.
The specific principles for calculating orders are applied to the calculation of orders. Fixed price.