Question

Cedar Creek Gold, Inc. is interested in the construction of a mass storage building for truck spare parts, core drills and miscellaneous supplies.

After discussing the project with a local contractor, they receive an estimate that the total construction cost of the 2,000 ft² building will be $150,000. Costs within each category include labor, material, and overhead items. The percentage of costs for each of several items (categories) is broken down as follows:             

Cost Items                                                                                 Percentage of

                                                                                                     Total Costs

                                                                                                                   (%)

Construction permits, legal and title fees                                          8          

Roadway, site clearing, preparation                                                   15         

Foundation, concrete, masonry                                                           13         

Wallboard, flooring, carpentry                                                             12         

Heating, ventilation, air conditioning                                                  13         

Electric, plumbing, communications, surveillance                           10         

Roofing, flooring                                                                                     12         

Painting, finishing                                                                                   17

                                                                                                           ________

                                                                                                               100         

a) What is the cost per square foot of the 2,000 ft² storage building?

b) If you are also considering a 4,000 ft² layout option, estimate your construction costs if:

              i. All cost items (in the table) change proportionally to the size increase.

              ii. The first two cost items do not change at all; all others are proportionate.

Answer 1

a) Cost per square foot of 2000 ft2 storage building = Total cost/Total square ft

= $150,000/2000 square ft

= $ 75 per square foot

b)

I. if the cost items are changing proportional to size increase:

Since the size has doubled from 2000 sq ft to 4000 sq ft, the cost will also double for all the cost items.

Total construction cost for 4000 ft2 storage building will be double of the total cost of 2000 ft2 storage building

So, Total construction cost for 4000 ft2 storage building = 2* $150,000

Ans = $300,000

The same can be summarized in below table also:

Cost Items	Percentage of Total costs (%)	construction costs for 2,000 ft2 layout	construction costs for 2,000 ft2 layout	construction costs for 4,000 ft2 layout	construction costs for 4,000 ft2 layout
Construction permits, legal and title fees	8	8% of 150,000	12,000	Double of construction costs for 2,000 ft2 layout	24,000
Roadway, site clearing, preparation	15	15% of 150,000	22,500	45,000
Foundation, concrete, masonry	13	13% of 150,000	19,500	39,000
Wallboard, flooring, carpentry	12	12% of 150,000	18,000	36,000
Heating, ventilation, air conditioning	13	13% of 150,000	19,500	39,000
Electric, plumbing, communications, surveillance	10	10% of 150,000	15,000	30,000
Roofing, flooring	12	12% of 150,000	18,000	36,000
Painting, finishing	17	17% of 150,000	25,500	51,000
Total	100		1,50,000		3,00,000

II. If the first two cost items do not change at all; all others are proportionate, then the total construction cost will be $265,500 calculated as below:

Cost Items	Percentage of Total costs (%)	construction costs for 2,000 ft2 layout	construction costs for 2,000 ft2 layout	construction costs for 4,000 ft2 layout	construction costs for 4,000 ft2 layout
Construction permits, legal and title fees	8	8% of 150,000	12,000	Same, no change	12,000
Roadway, site clearing, preparation	15	15% of 150,000	22,500	22,500
Foundation, concrete, masonry	13	13% of 150,000	19,500	Double of construction costs for 2,000 ft2 layout	39,000
Wallboard, flooring, carpentry	12	12% of 150,000	18,000	36,000
Heating, ventilation, air conditioning	13	13% of 150,000	19,500	39,000
Electric, plumbing, communications, surveillance	10	10% of 150,000	15,000	30,000
Roofing, flooring	12	12% of 150,000	18,000	36,000
Painting, finishing	17	17% of 150,000	25,500	51,000
Total	100		1,50,000		2,65,500