Research On Contractor Earned Income Management On Condition Of Variations

In recent years, construction industry is booming and the development has brought fiercemarket competition in China. A lot of facts and figures proved that construction enterpriseswere facing low profits in long time. It has been an important issue that the contractor wins abid and achieves further earned income. A variety of engineering practices show thatvariations always provide an important opportunity for the contractor earned income.Based on the above point of view, through analyzing the relevant literature andregulations, the article put forward two phases to realize contractor earned income. Biddingstage is the preparation phase and construction stage is the implementation phase forcontractor earned income. In the basis of clauses of Code of Valuation with Bill Quantity ofConstruction Works and Construction Standard the Tender Documents, the framework of thearticle was determined. In the perspective of contractor earned income, the article analyzeddifferent variation situations, identified opportunities and determined earned income strategies.The main contents of the article are as follows:First, for variations caused by the error of bidding documents, it analyzed the variationsituations such as variation caused by construction drawing not matching list itemsdescription, list items increasing caused by omissions of list items, measurement itemsincreasing caused by omissions of list items. Through analyzing relevant regulations andengineering practices, it determined the point of earned income opportunities. The articledeveloped specific earned income strategies in basis of unbalanced bid and variation schemeoptimization.Second, based on the clauses of Construction Standard the Tender Documents aboutvariation, the article analyzed the five situations of variation in the phase of contract executed.The situations are as follows: changing the project baseline, elevation, location or size,changing the quality or other characteristics, changing the construction time, process,sequence of a particular work, canceling some works, and completing the additional works.Through analyzing different situations of variation, the article identified the opportunities ofcontractor earned income and developed strategies under the earned income paths.Third, the connotation and main situations of rationalization proposal were determinedby analyzing relevant documents and engineering practice cases. And then, through analyzingthe common ground of contractor and employer, the basic demand for realizing rationalizationproposal was determined. In the case, two main paths to determine the reasonablerationalization proposals are put forwarded using value engineering. For rationalizationproposals put forward by different paths, the article put forward specific earned incomestrategies in the basis of unbalanced bid and variation scheme optimization.