# PJM Section 1 Quiz, #2

Please see the attached question from Section 1 Quiz.
Can you please identify why the percentages are not of \$138,000?

I did the problem like this:
\$2,300,000 x 6% = \$138,000
40% + 5% + 5% = 50%
100%-50% = 50%
50% of \$138,000 = \$69,000

If you take 40% of \$138,000 = \$82,800 and then 10% of the \$82,800 = \$74,520.
Why are the percentages not added together and of the original project gross fee?

Thank you in advanced for your help.

Thanks so much for your question! Both the contingency and the non-reimbursable expenses are based on the architect’s net service revenue. This is why we have to take out the 40% first for the consultant’s fees to get the net service revenue, and then take out 10% of the net service revenue to get to the labor costs. The consultants will include their own contingency and have their own non-reimbursable expenses separate from the architect that will be taken from their own net service revenue. I hope this helps! Thank you!

-Rebecca