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instead relying on suppliers to deliver needed materials to the
construction site at the appropriate time. Petitioner only
ordered the materials it needed for the job for the particular
day. Petitioner had no plant or other facility to store
materials and could not store materials at the construction site.
(Petitioner left no material on site overnight except,
occasionally, a negligible amount.) Concrete could not be stored
on site for an additional reason: Within a few hours of
delivery, it would harden and become useless and worthless.
Thus, petitioner tried to estimate as closely as possible the
amount of materials needed so there would not be anything left
over. Petitioner bore the cost of any wasted materials if they
were the result of an over order, or, in the case of concrete, of
it not being laid in time. If the materials were defective or,
in the case of concrete, delivered too late, the supplier was
responsible and bore the cost.
Virtually all of petitioner’s projects required laying some
concrete. Petitioner also engaged in related work, such as
preparing a site by removing existing concrete or stone.
Petitioner also installed items such as reinforcing steel, piping
for sewers and drainage, and guardrails. During the year in
issue, 67 percent of petitioner’s total materials cost was due to
concrete, 16 percent was due to stone, 6 percent was due to
reinforcing material, and the remainder was due to other
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Last modified: May 25, 2011