Cost of the Work

10.2.1. Costs Included: The term Cost of the Work means the sum of all costs necessarily incurred and paid by Contractor in the proper performance of a change in the Work. When the value of any Work covered by a Change Order, Extra Work Order or Construction Change Directive or when a Claim for an adjustment in Contract Price is determined on the basis of Cost of the Work, the costs to be reimbursed to Contractor will be only those additional or incremental costs required because of the change in the Work. Except as otherwise agreed in writing by Owner's Representative, such costs shall be in amounts no higher than those prevailing in the locality of the Project and shall include only the items indicated below:

10.2.1.1. Payroll costs for employees in the direct employ of Contractor in the performance of the Work under schedules of job classification agreed upon by Owner's Representative and Contractor.

10.2.1.1.1. Such employees shall include without limitation engineers, superintendents, foremen, and other supervisory, safety, security and clerical personnel employed full time at the Site.

10.2.1.1.2. Payroll costs for employees not working exclusively in connection with the Work shall be apportioned based on their time spent working on the Work.

10.2.1.1.3. Payroll costs shall include, but shall not be limited to, salaries and wages plus the cost of fringe benefits, which shall include social security contributions, unemployment, excise, and payroll taxes, workers' compensation, union, health and retirement benefits, bonuses, sick leave, vacation and holiday pay applicable

- 68 - thereto.

10.2.1.1.4. The expenses of performing Work outside the regular working hours, on Saturday, Sunday, or legal holidays, shall be included in the above mentioned costs, to the extent authorized by Owner's Representative.

10.2.1.2. Actual cost of all necessary materials and equipment furnished and incorporated in the Work, including costs of transportation, taxes and reasonable and necessary storage thereof, and Suppliers' field services required in connection therewith.

10.2.1.2.1. All cash discounts with regard to the purchase by Contractor of materials and equipment shall accrue for the benefit of Contractor unless Owner deposits funds with Contractor with which to purchase the materials and equipment, in which case the cash discounts shall accrue to Owner.

10.2.1.2.2. All trade discounts, rebates, and refunds and returns from sale of surplus materials and equipment shall accrue to Owner, and Contractor shall make provisions so that these discounts etc. may be obtained.

10.2.1.3. Payments made by Contractor to Subcontractors for Work performed by Subcontractors.

10.2.1.3.1. If required by Owner's Representative, Contractor shall obtain competitive bids from subcontractors acceptable to Owner and Contractor and shall deliver such bids to Owner, who will then determine, with the advice of Architect/Engineer, which bids, if any, will be acceptable.

10.2.1.3.2. If any subcontract provides that the Subcontractor is to be paid on the basis of Cost of the Work plus a fee, the Subcontractor's Cost of the Work and fee shall be determined in the same manner as Contractor's Cost of the Work and fee as provided in this Article 10.2.

10.2.1.4. Reasonable and necessary costs of special consultants (including but not limited to engineers, architects, testing laboratories, surveyors, attorneys, and accountants) employed for services exclusively related to the Work.

10.2.1.5. Supplemental costs including the following:

10.2.1.5.1. The proportion of reasonable and necessary transportation, travel, and subsistence expenses of Contractor's employees incurred in discharge of duties connected with the Work. Airplane travel shall be on coach class and the car transportation, hotel and subsistence shall be at moderate cost.

10.2.1.5.2. Reasonable cost, including transportation, taxes and maintenance, of all materials, supplies, equipment, machinery, appliances, computers, office, warehousing and temporary facilities exclusively related to the Contract, and cost, less market value, of such items used but not consumed which remain the property of Contractor.

10.2.1.5.3. Rentals of all construction equipment and machinery, and the parts thereof whether rented from Contractor or others in accordance with rental agreements approved by Owner's Representative with the advice of Architect/Engineer, and the costs of transportation, loading, unloading, assembly, dismantling, and removal thereof.

10.2.1.5.3.1. All such costs shall be in accordance with the terms of said rental agreements.

- 69 -

10.2.1.5.3.2. The rental of any such equipment, machinery, or parts shall cease when the use thereof is no longer necessary for the Work.

10.2.1.5.4. Sales, consumer, use, and other similar taxes related to the Work, and for which Contractor is liable, imposed by Laws and Regulations.

10.2.1.5.5. In such instances (only) where Contractor is insured under OCIP, or where the Owner assumes responsibility for some part of the required projects insurances (such as Builder’s Risk) losses and damages (and related expenses) caused by damage to the Work, not compensated by said insurance, sustained by Contractor in connection with the performance of the Work, provided such losses and damages have resulted from causes other than the negligence of Contractor, any Subcontractor, or anyone directly or indirectly employed by any of them or for whose acts any of them may be liable.

10.2.1.5.5. 1. Such losses shall include settlements made with the written consent and approval of Owner's Representative. No such losses, damages, and expenses shall be included in the Cost of the Work for the purpose of determining Contractor's fee.

10.2.1.5.6. The cost of all utilities, telephone, data, fax, internet, security services, fuel, and sanitary facilities within the Site.

10.2.1.5.7. When the Cost of the Work is used to determine the value of a Change Order, or Construction Change Directive, Extra Work Order or of a Claim, the cost of premiums for additional Bonds and insurance required because of the changes in the Work.

10.2.1.5.8. An amount of the Contractor's main office overhead costs, when applicable, reached by mutual accord between the parties. If no mutual accord can be reached, the cost for main office overhead shall be computed using the Eichleay case and subsequent case law. If the Contractor does not have financial statements prepared externally by a recognized CPA, he must prepare them in order to be able to present a claim for this purpose.

10.2.2 Costs Excluded: The term Cost of the Work shall not include any of the following items:

10.2.2.1. Payroll costs and other compensation of Contractor's officers, executives, principals (of partnerships and sole proprietorships), general managers, engineers, architects, estimators, attorneys, auditors, accountants, purchasing and contracting agents, expediters, timekeepers, clerks, and other personnel employed by Contractor who work at Contractor's principal, branch or other office, other than Contractor's office at the Site, for general administration of the Work, all of which are to be considered administrative costs covered by the Contractor's fee, and not specifically included in the agreed upon schedule of job classifications referred to in Article 10.2.1.1 or specifically covered by Article 10.2.1.4.

10.2.2.2. Expenses of Contractor's principal, branch or other offices, other than Contractor's office at the Site.

10.2.2.3. Any part of Contractor's capital expenses, including interest on Contractor's capital employed for the Work and charges against Contractor for delinquent payments.

10.2.2.4. Costs due to the negligence of Contractor, any Subcontractor, or anyone directly or indirectly employed by any of them or for whose acts any of them may be liable, including but not limited to, the correction

- 70 -

of defective Work, disposal of materials or equipment wrongly supplied, or making good any damage to property.

10.2.2.5. Other overhead or general expense costs of any kind and the costs of any item not specifically and expressly included in Articles 10.2.1.1 and 10.2.1.2, unless proven as a valid reasonable and necessary expense directly and exclusively related to the Project.

10.2.3. Contractor's Fee. When the value of any Work covered by a Change Order/Extra Work Order or when a Claim for an adjustment in Contract Price is determined on the basis of Cost of the Work, Contractor's fee shall be determined as set forth in Article 10.5.

10.2.4 Documentation: Whenever the Cost of the Work for any purpose is to be determined pursuant to Articles 10.2.1 and 10.2.2, Contractor will establish and maintain records thereof in accordance with generally accepted accounting practices and submit in a form acceptable to Architect/Engineer, or Owner's Representative, an itemized cost breakdown together with supporting documentation and data.

10.2.5 Time Extension: Whenever additional time is required to perform extra work, said time allotment shall be included as part of the Change Order.

10.2.6 If the requirement specified in Article 10.1.2.3, above, causes a delay in the project completion, the costs of said delays, including project and main office overhead shall be added to the cost of the Work and a reasonable time extension provided under the Contract.