Deck 3: Cost-Estimation Techniques

Question 1

The cost of construction for a hydrogen plant with a capacity of 7000 standard cubic feet per day (scfd) was $10 million ten years ago, when the current construction cost index was 4535. If the index increased at an average rate of 6.8% per year for the past ten years, what would a(n) 12,000- scfd plant with a similar design be expected to cost now? Use the
cost- capacity exponent of 0.56.

Answer 1

$26,109,534.10

Question 2

The cost of carbon dioxide (CO2) lasers that are used in welding and marking applications was $6000 when the index was 175. What will be the estimated cost of the replacement when the index is 230?

Answer 2

$7885.71

Question 3

The cost of an aerobic digester system with a capacity of 140 million gallons per day (MGD) is $2.1 million. If the cost- capacity exponent is 0.14, what would be the expected cost of a 440- MGD system?

Answer 3

$2,465,157.91

Question 4

An assembly task has a learning curve rate of 93% and reaches a steady state after 70 units with 15 man- hours per unit. What is the estimated number of man- hours required to complete the first and the fifth units?

Question 5

The costs of manufacturing horizontal fixed- mount barcode scanners are as follows: The production has a 89% learning curve applied to labor required, and the time to complete the first unit was 37 direct labor hours. Determine the unit selling price based on the estimated time to complete the 100th unit, if the company wants a profit margin of 10% based on total manufacturing costs.

Question 6

If 17 man- hours are needed to complete the 5th replication of a certain task and 12 man- hours are needed to complete the 10th replication, what is the learning- curve parameter for this task?

Question 7

What is the estimate of the cumulative average hours per unit required to produce the 5th unit of a production run that has a(n) 78% learning curve, if the first unit takes 50 hours?

Question 8

A property manager wants to estimate the annual costs of window cleaning for a newly acquired office building. She collected the following information related to costs of the 10 properties she currently manages:
Σxi = 17,470 Σx 2 = 34,125,100, where x is the window surface (ft2)
Σyi = 1,350,955 Σy 2 = 203,605,360,640 and Σxiyi = 2,635,901,696, where y is the
cleaning costs
Determine a CER equation for the cleaning costs and the correlation coefficient.

Question 9

The cost of standard lithography equipment with a capacity of 170 circuit boards per hour is $5700. If the cost for custom lithography equipment with a capacity of 185 circuit boards per hour is $6900, what is the value of the exponent in the cost- capacity equation?

Question 10

An autoclaves and sterilizers manufacturer has estimated the manufacturing costs of its new product as follows: The company's engineer estimated that the production of the new product has a 88% learning curve applied to labor required, and the time to complete the first unit was 54 labor hours. Assume the time required to complete the 10th unit and the competitor's price of $2053.44 per unit are used for cost estimation purposes. What is the maximum profit margin for the company to remain competitive?

Question 11

A new entrepreneur wants to estimate the costs of an offsite team- building event for her 14 employees. She was able to gather the following information on a 3- day program in which she is interested. Use the unit technique to estimate the cost per employee of this event. Assume there will 100% participation in all activities.

Question 12

Your boss asked you to estimate the required number of units sold to achieve a profit of
$26,500 per year. Currently, the product is sold at $1800 per unit. You have collected the following information: If the units sold must account for total production costs and desired profit, how many units of production would you recommend to your boss?

Question 13

An activated sludge plant cost $75 million when it was built in 1995. The detailed cost breakdown is given below. Determine a weighted index for the construction of a similar plant in 2009.