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CVE 4070

CVE 4070. Construction Engineering Solution to Estimating Quiz Prof. Ralph V. Locurcio, PE. Example 1… 5 min. Assume that the equipment portion of a chemical processing plant constructed in 2006 cost $1.2M and the total plant cost was $2.5M.

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CVE 4070

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  1. CVE 4070 Construction Engineering Solution to Estimating Quiz Prof. Ralph V. Locurcio, PE

  2. Example 1… 5 min. • Assume that the equipment portion of a chemical processing plant constructed in 2006 cost $1.2M and the total plant cost was $2.5M. • Therefore the equipment portion of the total cost was 48%. Estimate the cost of a new plant with the same processes if the equipment for the new plant has been determined to cost $2.7M. Assume time and location factors are negligible in this case. • Solution:

  3. Example 2… • Assume that the equipment portion of a chemical processing plant constructed in 2006 cost $1.2M and the total plant cost was $2.5M. Therefore the equipment portion of the total cost was 48%. Estimate the cost of a new plant with the same processes if the equipment for the new plant has been determined to cost $2.7M. Assume time and location factors are negligible in this case. • Solution: C2/E2 = C1/E1 … solve for C2 C2 = [C1/E1] x E2 C2 = [$2.5m/$1.2m] x $2.4 m C2 = [2.08] x $2.7 = $5,625,000 m • Solution: TPC = ET/(1-PT) = $2.7/(1-.48) where PT = $1.2m/$2.5m = $5,625,000

  4. Volumetric unit measure… • Similar to comparison of $/sf unit measure • Used when facility has differing ceiling heights • Calculate the $/cf of known facility • Determine $/cf of known facility • Calculate total cf of new facility • Using known $/cf calculate cost of new facility • Adjust for time and location

  5. Example 2… 10 min. • Determine the cost of a new warehouse which will have 3 distinct storage areas with differing ceiling heights. Area 1 = 12’; Area 2=14’ and Area 3 = 10’. The floor area of all three areas is 4000sf. • A similar warehouse was constructed earlier this year for $2.4M. In that building the floor area was 8000sf and the ceiling height was a uniform 14’. Assume time and location factors are negligible in this case. • Solution:

  6. Example 2… • Determine the cost of a new warehouse which will have 3 distinct storage areas with differing ceiling heights. Area 1 = 12’; Area 2=14’ and Area 3 = 10’. The floor area of each area is 4000sf. A similar warehouse was constructed earlier this year for $2.4M. In that building the floor area was 8000sf and the ceiling height was a uniform 14’. Assume time and location factors are negligible in this case. • Solution: Existing Building A = 8000sf x 14’ = 112,000 cf Cost/cf = $2,400,000 / 112,000 cf = $21.43/cf New Building A1 = 4000sf x 12’ = 48,000 cf A2 = 4000sf x 14’ = 56,000 cf A3 = 4000sf x 10’ = 40,000 cf Total = 144,000 cf Cost = 144,000 cf x $21.43/cf = $3,085,714

  7. Adjusting for time… • Prices “escalate” over time due to inflation • Must adjust estimated cost to “mid-point” of construction. • Determine period of construction • Determine start date of construction • Determine mid-point of construction = average cost • Determine “escalation rate” = given index • Multiply estimated cost by “escalation rate” • Note: escalation is compounded, ie. increase is cumulative over number of years of escalation

  8. Adjusting for location… • Prices differ by region of the country • Must consult a reliable index to determine “relative” cost of construction between regions • RS Means Cost Data or Engineering News Record are examples • Adjustment is a simple ratio multiplied times the estimated construction cost. • So… C2/C1 = L2/L1 X Estimated Construction Cost and C2 = C1 x L2/L1

  9. Example 3… 15 min. • You have been asked to prepare a conceptual cost estimate for the construction of a new university dormitory at Florida Tech to open in 2012. • You have 2007 RS Means data that provides a cost of $30,000/bed for similar dormitories in the northeast of the US, and a construction period of 2 years. • The Means data states that construction costs escalate at 10% per year in the southeast. According to RS Means Cost Comparison Index, the construction cost in the southeast is 0.80 compared to the northeast. • If the dorm is to house 200 students at Florida Tech. What is the estimated cost for the new dorm at Florida Tech at the mid-point of construction? • Estimated Florida Tech cost:______________________ • Show your work:

  10. Solution to pop quiz… • $30,000 per bed x 200 beds = $6,000,000… in the northeast in 2007 • In the southeast in 2007… $6,000,000 x 0.80 = $4,800,000 • Construction start is… Occupancy – 2 years = 2012 – 2 = 2010 • Mid-point of construction is = 2010 + 1 = 2011 • Years of escalation… 2011 – 2007 = 4 yrs Cost Index

  11. Solution to pop quiz… • Escalation: $4,800,000 x 1.10 = $5,280,000 (2007-08) $5,280,000 x 1.10 = $5,808,000 (2008-09) $5,808,000 x 1.10 = $6,388,800 (2009-10) $6,388,800 x 1.10 = $7,027,680 (2010-11)

  12. Solution… Therefore… the estimated cost of the new dormitory for Florida Tech at the mid-point of construction in 2011 is: $7,027,680

  13. Last Slide

  14. Happy Thanxgiving!!

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