Discussion Board Forum 3

1.8 Case Study

RPO Construction has been hired to build a custom-made executive home in Vancouver, Washington. Two acres of property have been purchased on the banks of the Vancouver Harbor by a retired executive and his wife for the location of their new custom home. The single-family residence will be an 8,500 square feet, two-story structure consisting of wood frame, cement slab foundation, and tile roof. There will be a three-car garage attached, fully landscaped front yard with circle-around driveway, patio, and deck off the rear of the house overlooking the harbor. The deck will include an infinity pool and oversized spa with outdoor kitchen appliances. A dock with a boathouse will be constructed at the water’s edge with the patio decking connected by a wood staircase.

Concerns in the house construction consist of pouring the slab foundation during the winter season, difficulty in location of the septic sewer system, and obtaining permits that allow for the creation of a dock and boathouse. The owners of the house have sold their current home and will be closing escrow shortly, requiring them to stay in a hotel temporarily. They have given the construction company the completion date so they can minimize the cost of their hotel stay. The construction company has told the homeowners it will take six months to finish their home if there are no delays due to poor weather, resolving the location of the septic system, and possible delays in obtaining permits. The homeowners have agreed to the schedule. If everything goes as scheduled, the house will be finished on time for the homeowners to move in.

Details of cost are as follows: slab floor $32,000, total risk $9,000; septic sewer system cost $18,800, total risk $5,100; dock and boathouse cost$82,000, total risk is $11,000. Contractor agreed to a late completion penalty of $2,500 per day each day the project extends beyond the completion due date.