1. A contract calls for a total payment of $800,000 with a guarantee. Essentially the contractor is guaranteed to make at least $200,000 above his costs. If the contractor can demonstrate his costs exceed $600,000, the project will pay the difference, with a $50,000 ceiling on the overage. The contractor demonstrates he spent $623,000. How much (gross) must the project remit to the contractor?

The gross which the project has to remit to the contractor is $823,000

Explanation:

There are two things that must be fulfilled for the project to remit to the contractor is the amount .

1) First is the guaranteed payment of $800,000.

2) Second, the contractor's expense is more than $600,000, with a payment cap of up to $ 50,000.

The contractor has demonstrated that the cost incurred is $623,000 which is $23,000 above the limit of $600,000.

As this gap is still below $50,000, this will be handed over to the contractor by the client.

The gross which the project has to remit to the contractor = $800,000 + $23,000 = $823,000

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