Oregon Construction Contractors (CCB) Practice Test

Who typically keeps the savings if a project is completed for less than the estimated cost?

1. The client

2. The contractor

3. The subcontractor

4. State authorities

The correct answer is: The contractor

In construction projects, the entity that typically keeps any savings realized when a project is completed for less than the estimated cost is the contractor. This arrangement is often established in the contract terms, which may specify that if the project is finished under budget, the contractor can retain the difference. This practice serves as an incentive for contractors to manage costs effectively and complete the project efficiently. For clients, while they benefit from lower overall project costs, they generally do not receive the savings directly, as the financial risks and rewards outlined in the contract typically favor the contractor. Subcontractors, on the other hand, operate under the terms agreed upon with the contractor, and any savings would likely be encompassed within the contractor's overall financial management of the project. State authorities are primarily involved in regulatory matters and do not partake in the financial aspects of the contracted work in terms of savings from cost reductions. Thus, the contractor's ability to keep the savings reflects their responsibility for budgeting and managing the project, which aligns their financial interests with successful project completion.