The NYKER Corp. has requested bids for a major residential construction project to be built on man-made islands off shore in warm, clear waters, surrounded by a breakwater that will keep wave action to a minimum. The project is a series of ultra-luxury condos and apartments that will cater to the wealthy. As per the bid specifications, the project is of the design-bid-build type, with all project specifications done up front. Bidders have followed standard construction procedures, which allow for the use of sub-contractors for any or all portions of the project. The sub-contractors are answerable to the general contractor. The bidders have reviewed the plans and specifications, and as of the closing date for the bids, 5 contractors have submitted bids, as follows: Bidder Amount of Bid Yrs. In business $132,456,750 25 Hyland & Seguin Construction Hayes & McCabe Partners, L.L. C. Taylor Construction, Inc. $133,908,010 23 $136,876,325 13 B. Hall General Contracting & Engineering $134,016,750 14 LaPrade Engineering & Construction, L.L.C. $129,555,710 18 Each bidder was required to provide, as part of the bidding process, a bid bond equal to 3.25% of the bid price that accompanied the bid, except in the case of companies that have not been in business for at least 15 years, which the bid bond was 4.5% of the bid. QUESTION #1: What is the TOTAL AMOUNT of the bid bonds that were submitted at the bid opening? The lowest qualified bidder in the project was Hyland & Seguin Construction, so they are the General Contractor. They are now required to execute the contract and provide a variety of bonds as part of the agreement. They must provide bonds for the following: performance, payment, sub-contractor, and materials. The performance bond is subject to the following schedule: Amount of Bonding required First $500,000 Next $5 million Next $10 million Next $15 million Remainder Cost of coverage $6.25/$1,000 $5.75/$1,000 $4.75/$1,000 $3.75/$1,000 $2.50/$1,000 Question #2: What is the correct cost of the performance bond? The dollar costs of the various portions of the contract are related in the following table: Type of work performed General Construction Earthwork Electrical Mechanical Concrete Masonry Total Contract Cost Cost of contract/sub-contract $40,976,110 $18,620,989 $22,062,019 $15,015,214 $14,276,194 $8,615,082 $121,876,239 The profit portion for each of these specialties is related in the following fixed-fee + %-age table: Contract Amount $25,000,000 Fixed Fee amount + $975,000+ $1,000,000 + $1,600,000+ $2,400,000+ %-age 9.25% of amount over $$1 million 8.15% of amount over $10 million 7.45% of amount over $15 million 6.75% of amount over $25 million