W4_Reginald Nwachukwu_Using Simple Cost Estimating Techniques for Desicion Making

1. Problem Definition or Opportunity Statement:

" Evaluation of preliminary cost estimate for 3.6 Km length of storm water pipe construction using simple cost estimating techniques"

             Table 1-1 Historic Cost Data - sourced from similar past projects

2. Development of Feasible Alternatives:

The alternatives methods of cost estimating techniques to be considered for the preliminary cost estimating analysis of the proposed project includes:

I.   Unit Cost Technique

II.  Cost Index

III. Weighted Cost Index

IV. Factor Techniques

V. Power Sizing Technique 

3. Development of Outcome of Each Alternative:

The outcomes for each alternative is developed by evaluating historic cost data using the formulas for the different types of simple cost estimating techniques:

      Table 1-2 Calculations of weighted Cost Index

4. Selection of Acceptable Criteria:

The acceptable criteria used to select the acceptable cost estimates is estimating technique that produced the highest value of cost estimate. The effects of Escalations due to inflations and Contingencies are not considered.

5. Analysis And Comparison of Outcome From Each Alternatives:

The various outcomes of each estimating techniques is as summarized below viz:

6. Selection of the Preferred Alternative:

The selection of the preferred cost estimate will be based on the cost estimating technique that produces the highest cost estimate value.

The selected estimated cost is using the Target Cost = N 233 million

7. Performance Reporting And Evaluation of Results:

The performance and monitoring of the cost estimates can be evaluated by considering the effects of inflations or cost escalations and contingency plans for the proposed project.

References:

1. Sullivan William, Wicks M. Elin & Keolling C. Pactricks (2009) Engineering Economy Fourteenth Edition Pearson International Edition

2. Giammalvo, D. Paul (2012. October 22) Integrated Portfolio (Asset), Program (Operations) and 
Project Management Methodology Course (Cost Engineering) Slide # 2 P. 77 of 105

3. Y.O. Lam Index Numbers: ( Relevant to AAT  Examination Paper 4 : Business Economics and Financial Mathematics  Retrieved from

http://www.hkiaat.org/images/uploads/articles/AAT_Paper_4_Index_numbers.pdf