Pm 592 Assignment 2

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PM 592 : Week 2 Assignment Financial Plan Assignment Answers 2 -1 Basic Estimating Problem: Develop a Cost Estimate Equipment (items 1-4) 1. 2 Pieces of equipment: Cost = $15,000 + $35,000 = $50,000 2. Electric Hook ups: (400 ft) ($25 per foot) = $10,000 3. Controls for equipment: 2 x $600 = $1200 4. Start-up Materials: (3,700 pounds ) ($2.70) = $9,990 a. Equipment /Material Cost = $71,190 Installation and Labor (items 5 - 6) 5. Labor and installation: (2 specialist)(2 days)(8hours)($35.00 per hour) = $1,120 6. Contract Labor = $7,500 a. Installation and Labor Cost = $1,120 + $7,500 = $8,620 Overhead (items 7 and 9) 7. Engineering 15% (equipment/materials) = 15%($71,190)= $10,678.50 8. Inspections 3% (labor) = $258.60 9. G&A Expense 5%(Equipment/Material + Labor) =5%(71,190+$8,620)= $3,990.50 a. Overhead Cost = $10,678.50 + $258.60 + $3,990.50 = $14,927.60 Total Project Cost = (Equipment and Materials) + (Installation and Labor) + Overhead = $71,190 + $8,620 + $14,927.60 = 94,737.60 2-2 Three Point Estimate Problem Solution A: Formula: 3 Point Estimate = (Optimistic + (4 Most Likely) + Pessimistic )/6 ML = .30/lb O = .24/lb P = .62 = (.24/lb +( 4 x .30/lb) + .62/lb)/6 = (.24/lb + 1.2/lb+.62/lb)/6 = 2.06/lb / 6 = .34/lb Solution B: Formula: 3 Point Estimate = (Optimistic + (4 Most Likely) + Pessimistic )/6 ML = 40 tons O = 37 tons P = 47 tons = (37 tons + (4 x 40 tons) + 47 tons)/6 = 37 tons + 160 tons + 47)/6 = 40.67 tons Solution C: Expected total cost (simple method) = 41 tons @ .34 per pound and 1 ton is equal to 2000 lbs 41 tons * 2000 = 82,000 82,000 * .34 =

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