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 5. Company labor for installation requires two maintenance specialists for two days at eight hours per day and $ 35 per hour 6. Contract labor is estimated at a fixed price of $ 7,500 7. Engineering is estimated to be 15% of (equipment / material) cost based on past experience 8. Inspection is estimated to be 3% of (labor) cost based on past experience 9. General and Administrative expenses are estimated to be 5% of the total of (equipment / material) and (labor) based on past experience.
Note: For this problem, only items 5 and 6 are considered "labor" for the purpose of calculating items 8 and 9.
Check answer: Total project cost = $94,737.60 Equipment Costs | | $15,000.00 | $35,000.00 | $50,000.00 | Elcetrical Hook-up | | 400 Feet | $25.00/Ft | $10,000.00 | | | | | | Equipment Controls | | 2 | $600.00 | $1,200.00 | Start-up Materials | | 3700 Lbs | $2.70/Lb | $9,990.00 | | | | | | Total Equipment & Material | | | $71,190.00 | | | | | | Personnel | | 32 | $35.00 | $1,120.00 | 2/day for 8 hours | | Hours | Per Hour | | | | | | | Contract Labor Fixed Costs | | $7,500.00 | $7,500.00 | | | | | | Total Installation & Labor | | | $8,620.00 |