Architecture Commons^™

Item Price Loading, David W. Cattell

David Cattell

Item Pricing is described as the process of allocating prices to the component items of a construction project. The effects of these item prices on the financial performance of a contract are discussed and a new model presented that attempts to maximise a project’s return for a given risk. This model is an application of Modern Portfolio Theory, an approach used in theoretical investment finance. It is suggested that Item Pricing could become a major strategy for building contractors, and that by implementing this model it is possible to considerably improve profits.