CHAPTER 3 - Educators

110 CHAPTER 3/COST-ESTIMATION TECHNIQUES
is 106.8. The average compound rate of growth
should hold steady for the next 15 years. If
an aircraft costs $10.2 million to build in 2006,
what is its expected cost in 2008? State your
assumptions. (3.3)
3-13. Six years ago, an 80-kW diesel electric set cost
$160,000. The cost index for this class of equipment six
years ago was 187 and is now 194. The cost-capacity
factor is 0.6. (3.4)
a. The plant engineering staff is considering a 120kW
unit of the same general design to power a
small isolated plant. Assume we want to add a
precompressor, which (when isolated and estimated
separately) currently costs $18,000. Determine the
total cost of the 120-kW unit.
b. Estimate the cost of a 40-kW unit of the same
general design. Include the cost of the $18,000
precompressor.
3-14. In a new 55-and-over gated community, light
poles and underground cables need to be installed. It
is estimated that 25 miles of underground cabling will
be needed and that each mile of cabling costs $15,000
(includes labor). A light pole is to be installed every
50 yards, on average, and the cost of the pole and
installation is $2,500. What is the estimated cost for the
entire job? (3.4)
3-15. In a building construction project, 7,500 feet
of insulated ductwork is required. The ductwork is
made from 14-gauge steel costing $8.50 per pound.
The 24-inch-diameter duct weighs 15 pounds per
foot. Insulation for the ductwork costs $10 per foot.
Engineering design will cost $16,000, and labor to
install the ductwork will amount to $180,000. What
is the total cost of the installed ductwork for this
project? (3.3)
3-16. Four hundred pounds of copper go into a 2,000square-foot,
newly constructed house. Today’s price
of copper is $3.50 per pound. If the cost of copper is
expected to increase 4.5% per year into the foreseeable
future, what is the cost of copper going to be in a new
2,400 square foot house 10 years from now. Assume the
cost capacity factor for increases of copper in houses
equals 1.0. (3.4)
3-17. The structural engineering design section within
the engineering department of a regional electrical
utility corporation has developed several standard
designs for a group of similar transmission line towers.
The detailed design for each tower is based on one of the
standard designs. A transmission line project involving
50 towers has been approved. The estimated number
of engineering hours needed to accomplish the first
detailed tower design is 126. Assuming a 95% learning
curve,
a. What is your estimate of the number of engineering
hours needed to design the eighth tower and to
design the last tower in the project?
b. What is your estimate of the cumulative average
hours required for the first five designs? (3.4)
3-18. The overhead costs for a company are presently
$X per month. The management team of the company,
in cooperation with the employees, is ready to implement
a comprehensive improvement program to reduce
these costs. If you (a) consider an observation of
actual overhead costs for one month analogous to an
output unit, (b) estimate the overhead costs for the
first month of program implementation to be 1.15X
due to extra front-end effort, and (c) consider a 90%
improvement curve applicable to the situation, what
is your estimate of the percentage reduction in present
overhead costs per month after 30 months of program
implementation? (3.4)
3-19. In a learning curve application, 846.2 workhours
are required for the third production unit and
783.0 work-hours are required for the fifth production
unit. Determine the value of n (and therefore s) in
Equation (3-5). (3.4)
3-20. You have been asked to estimate the cost of
100 prefabricated structures to be sold to a local
school district. Each structure provides 1,000 square
feet of floor space, with 8-feet ceilings. In 1999, you
produced 70 similar structures consisting of the same
materials and having the same ceiling height, but
each provided only 800 square feet of floor space.
The material cost for each structure was $25,000 in
1999, and the cost capacity factor is 0.65. The cost
index values for 1999 and 2006 are 200 and 289,
respectively. The estimated manufacturing cost for the
first 1,000-square-foot structure is $12,000. Assume
a learning curve of 88% and use the cost of the
50th structure as your standard time for estimating
manufacturing cost. Estimate the total material cost and
the total manufacturing cost for the 100 prefabricated
structures. (3.3, 3.4)
3-21. The cost of building a supermarket is related
to the total area of the building. Data for the last 10