Unbalanced Pricing

The pay items are provided along with the Pay Quantities. If the pay items are to be measured and paid on the final measured quantity, then we can provide information to price the pay items to maximize the return. Some specifications are written that if an over/under pay item runs a certain percent, then the Unit Price is negotiated. Now, understanding this,you can forecast the final revenue result.

The following screen shot shows a typical over and under run situation. The overrun quantities are shown in green and the underrun is shown in red. I have balanced priced the job where all pay items are using their Balanced Unit Price. In the Variance box, the Profit row, there is an ADD of $4153 dollars.

This means that if your Forecast Quantities become the final measure amount, I lose the $4153 dollars. This is the difference between the Target Profit and the Forecast Profit. The issue is the underrun quantity is priced at its Balanced Price, meaning there is 3000 Ton that I will not be paid for if my 35000 Ton is what I am expecting.

Now, I will use the system’s Unbalanced feature to price all the pay items. See the following screen shot.

What the Unbalanced Autoprice did was to price out the underrun with it’s Direct Cost only. The overhead and profit share of the underrun was spread proportionately to the overrun items. The underrun was priced lower than normal and the Overrun items were price higher than normal.

Now look at the Variance block and see the Profit row where it now says CUT, meaning if my forecast quantities in up being the final measured quantities, I will pick up an additional $61,723 dollars in profit.

The CUT simple allows you to decide if you want to keep the final Proposal price as shown, or to CUT the $61,000 OR ANY PORTION of it from the final Proposal amount to get the job believing your Forecast Quantities is the final measured quantities. Of course you can enter any preferred Unit Price.