2-1 Basic Estimating Problem
Your company is installing a new piece of machining equipment and a robotic arm. Your manager asks for the project costs by cost category as well as the total amount. Given the following information, develop a base cost estimate by grouping costs by Equipment / Material (items 1 – 4), Installation / Labor (items 5 and 6), and Overhead (items 7-9). 1. Two pieces of equipment costing $ 15,000 and $ 35,000 2. Material required for electrical hook-up is 400 feet at $ 25 per foot 3. Controls for each piece of equipment are estimated at $ 600 each 4. Required start-up material is 3,700 pounds at $ 2.70 per pound …show more content…
Use the three-point estimating process to determine to determine the expected amount of structural steel needed for the project?
(c) Using the estimates from 1 & 2, what is the expected cost for structural steel over the life of the project?
(d) Using the "Complex" three-point method, what is the expected cost for structural steel over the life of the project?
Expected price = $0.34 per pound
Expected usage = 41 tons
Expected total cost (simple method) = $28,153 ($27,880 using rounded numbers)
Expected total cost (complex method) = $31,856 ($31,673 using rounded numbers)
2-3 Contingency Allowance Problem
You are a project manager for Cowboy Bill's Sandwich shop, a wholesale sandwich maker, and have been asked to manage the introduction of a new buffalo sandwich. Listed below are the initial cost estimates for the ingredients and labor for 1000 sandwiches delivered to the retail outlets: PRODUCT COMPONENT | COSTESTIMATE | TYPE OF ESTIMATE | Buffalo | $80.00 | Order of Magnitude (market price) | Lettuce | $15.00 | Definitive (own farms) | Tomatoes | $12.00 | Definitive (own farms) | Pickles