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In a construction project today, 600 square meters of thermic isolation is required. Main inputs consist...

In a construction project today, 600 square meters of thermic isolation is required. Main inputs consist of styro-foam and labor. In 2010, the cost of styro-foam was $8 per kg, knowing that the isolation used weighs 12 kilograms per 50 square meter. The cost index in 2010 was 190 while today in 2017 it is equal to 180. The estimated labor cost for a first installation is $27000. Past experience has shown that the cost related to the labor required for producing each new pump is lowered by 20%. Use the cost of the sixth installation as your standard cost to estimate the total direct labor cost, if the project needs 10 installations per each square meter. Calculate the total cost of the installed thermic isolation for this project.

Solutions

Expert Solution

Particulars Amount Calculation Remarks
Total sq metre                 600 Area of thermic isolation
Cost of styrofoam in 2010                     8
Cost adjusted for inflation (A)               7.58 (8/190)*180 (Cost base year/ Cost index base)* current cost index
Styrofoam required (B)                 144 (600/50)*12 (12Kg per 50 sqm)
Total cost of styrofoam (C=A*B)             1,091
Total installations (D)             6,000 (10*600) 10 installation per sqm *600 sq m
Cost per installation ('E)             7,078 (27000)*(1-0.2)^6 Cost of labour reduced till 6th installation
Cost of labour per installation (F=D*E) 4,24,67,328
Total Cost (F+C) 4,24,68,419

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Rahul Sunny answered 2 years ago
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