PANCRACIO INUPAKAN, the financial manager of LUMUNDOT CIVIL WORKS, INC., a domestic

civil engineering company, reread the recently received email. He was delighted that the nearly endless conversations with the departments of transportation and of public works and highways were finally coming to a close.

LUMUNDOT CIVIL WORKS has been selected as the prime contractor for a P1.68 billion project that involved the reconstruction and upgrading of the intermediate highway network linking the provinces north, south, east and west of Luzon to the National Capital Region (NCR). The NCR access roads project was indicative of the types of projects on which LUMUNDOT had established its reputation, both domestically and internationally, for being a leading construction contractor. The total cost of the project was estimated at P1.46 billion, so the P1.68 billion value provided only a 15 percent return, which was, unfortunately, below the 18 percent hurdle rate required by LUMUNDOT for projects of this nature. On the other hand, the less-than-desired returns seemed a small cost to pay to maintain a steady flow of new projects during these slow economic times.

The email requested from LUMUNDOT a response to the project proposal within a week. The wording of the contract would then be finalized in the subsequent weeks, and the contract signed by mid of the next quarter.