# Methods for the Calculation of the Lost Profit in Construction Contracts

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## Abstract

**:**

## 1. Introduction

## 2. Materials and Methods

#### 2.1. Algorithms of Profit Calculation

#### 2.2. Methods of Calculation of Lost Profits in Our and Foreign Construction Practice

#### 2.2.1. The “Before and After” Method

#### 2.2.2. Comparison Method (Yardstick)

#### 2.2.3. Method of Using Valuation Tools

#### 2.3. Model Example

#### 2.3.1. Calculation of Lost Profits Using the Comparison Method

#### 2.3.2. Calculation of Lost Profit Using the Valuation Tools Method (Cenkros 4)

- At the given price level (in the program, in the database II.Q/2017) we prepared a budget of unfinished construction work on the construction.
- From the budget, we found a calculated price of unfinished work of €32,280.
- We used the function “display of calculation structure” in the program, shown in Figure 8. From this graph, we can determine the amount of contract profit calculated by the software Cenkros
- Using the used calculation formula in the calculation structure of the cost and profit 10.25% of the residual price of work in progress, amounting to EUR 3309.

## 3. Results

## 4. Discussion

- The Before and After Method using the contractor’s accounting documents to estimate the approximate percentage of profits. Due to the simplicity of calculation, this method is one of the most widely used abroad. However, it requires increased demands on the evidence of the economy divided into a specific construction contract.
- The Comparison Method (Yardstick) uses a comparative analysis to calculate the loss of profit, the principle of which is in comparison with the profitability of comparable companies.
- Method of using valuation tools calculates the lost profits by using valuation tools. Software Cenkros 4, ODIS Žilina or Calkulus.

## 5. Conclusions

- it is a criterion for deciding on the economy of a company;
- it is a tool for accumulating and creating funds for the development of the company;
- it is the basis of redistribution between the business and the state;
- it motivates every entrepreneur.

## Author Contributions

## Funding

## Acknowledgments

## Conflicts of Interest

## References

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**Figure 7.**Displaying the calculation structure of the cost and profit on the contract (illustrative example) [26].

**Figure 8.**Displaying the calculation structure of the cost and amount of calculated profit on the contract [26].

**Table 1.**Sales and profits after construction companies in 2017 [27].

Company | Sales 2017 (Thousand Eur) | Profit After Tax 2017 (Thousand Eur) | Profit (%) |
---|---|---|---|

Strabag Pozemné a inžinierske staviteľstvo, s.r.o., Bratislava | 396,430 | 6,771 | 1.7080% |

Doprastav, a.s., Bratislava | 290,979 | 29,355 | 10.0884% |

Strabag s.r.o. Bratislava | 185,696 | 11,615 | 6.2548% |

Eurovia SK, a.s. Košice | 167,522 | 112,317 | 67.0461% |

Skanska SK, a.s. Bratislava | 111,425 | 595 | 0.5340% |

Goldbeck, s.r.o. Bratislava | 103,126 | 6526 | 6.3282% |

VUJE, a.s. Trnava | 90,038 | 5855 | 6.5028% |

Váhostav-SK, a.s., Bratislava | 82,729 | 150 | 0.1813% |

TSS Grade, a.s., Bratislava | 76,559 | 1470 | 1.9201% |

Inžinierske stavby, a.s., Košice | 63,465 | 5827 | 9.1814% |

DSC, a.s., Bratislava | 61,261 | 7336 | 11.9750% |

Cesty Nitra, a.s., Nitra | 60,325 | 2981 | 4.9416% |

Chemkostav, a.s., Michalovce | 59,306 | 737 | 1.2427% |

HB Reavis Managment, s.r.o., Bratislava | 58,294 | −7395 | −12.6857% |

Ingsteel, s.r.o., Bratislava | 57,083 | 675 | 1.1825% |

AVERAGE PROFIT | 1,864,238 | 184,815 | 9.9137% |

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**MDPI and ACS Style**

Majer, R.; Ellingerová, H.; Gašparík, J.
Methods for the Calculation of the Lost Profit in Construction Contracts. *Buildings* **2020**, *10*, 74.
https://doi.org/10.3390/buildings10040074

**AMA Style**

Majer R, Ellingerová H, Gašparík J.
Methods for the Calculation of the Lost Profit in Construction Contracts. *Buildings*. 2020; 10(4):74.
https://doi.org/10.3390/buildings10040074

**Chicago/Turabian Style**

Majer, Radovan, Helena Ellingerová, and Jozef Gašparík.
2020. "Methods for the Calculation of the Lost Profit in Construction Contracts" *Buildings* 10, no. 4: 74.
https://doi.org/10.3390/buildings10040074