Question

The direct and indirect costs estimated by a contractor for bidding a project is Rs. 160000 and Rs. 20000 respectively. If the markup applied is 10% of the bid price, the quoted price (in Rs.) of the contractor is
1. 196000
2. 182000
3. 200000
4. 198000

Answer 1

Correct Answer - Option 4 : 198000

Explanation:

Total cost = Direct cost + Indirect cost

Total cost = 160000 + 20000 = 180000

According to the question, the markup applied is 10% of the bid price.

Mark up cost = 0.10 × 180000 = 18000

Quoted price = 180000 + 18000 = 198000

Indirect project Cost: Indirect project cost are those expenditures which cannot be clearly allocated to the individual activities of the project, but are assessed as a whole.

The indirect cost rises with an increase in duration. 

Direct Project Cost: These include labour cost, material cost, equipment cost etc.

Direct cost decreases with an increase in duration.