You can estimate the labor cost of erecting 284 tons of structural steel in either of...

You can estimate the labor cost of erecting 284 tons of structural steel in either of two ways. The first method relies on a knowledge of erection labor cost expressed as cost per ton ($/tn) of steel. The second method relies on a knowledge of labor production expressed as crew hours per ton erected (crew hr/tn) and the hourly cost of labor expressed as cost per crew hour ($/crew hr).
1. Which of the two methods is likely to give the most accurate estimate and why?

b. Your boss is wondering how the erratic and unpredictable changes in the purchase price of the steel is going to affect your estimate. Explain to her what effect, if any, this will have and why.

Expert Solution

I think the second method will give most accurate estimate because in the first method includes the labour charges for erection of 1 ton i.e., in this method we will calculate the labour rate for the erection of 1 ton of steel and in second method we will take that the time taken by the labours to erect 1 ton of steel and we take hourly cost of labour. In the first method the time is not a constraint as it only includes the labour charges for erection of one ton only but in second method the time taken by the labour is calculated along with hourly charges of the labour by the help of this we can make the effective production. If we want 10 tons/ day then by using second method we can incorporate the excess labour or less labour and on hourly basis also.
The unpredictable changes in the prices of steel will cause significant effect in directly or indirectly on the erection also because we have to buy the steel this is one case , if the steel is provided and we have to erect it this is also cause increase in price because for erection we use nuts, bolts and screws all are generally made up of steel only. If one or two Kgs will not cost more price but we required more amount then this will impact our estimation.

Ally Wells answered 1 year ago

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