Complete A Project: Time And Cost Exercises

Complete A Project Time And Cost Exercises

The assignment is to complete a Project Time and Cost Exercises. Resource: Project Management , Ch. 5 I will attach Complete Exercises 1-3 in Ch. 5 of Project Management . Submit your answers in a Microsoft ® Word APA formatted document.

Exercises Calculate the direct cost of labor for a project team member using the following data: Hourly rate: $40/hr Hours needed: 80 Overhead rate: 40% Mrs. Tolstoy and her husband, Serge, are planning their dream house. The lot for the house sits high on a hill with a beautiful view of the Appalachian Mountains. The plans show the size of the house to be 2,900 square feet. The average price for a lot and house similar to this one has been $120 per square foot.

Fortunately, Serge is a retired plumber and feels he can save money by installing the plumbing himself. Mrs. Tolstoy feels she can take care of the interior decorating. The following average cost information is available from a local bank that makes loans to local contractors and disperses progress payments to contractors when specific tasks are verified as complete. 24% Excavation and framing complete 8% Roof and fireplace complete 3% Wiring roughed in 6% Plumbing roughed in 5% Siding on 17% Windows, insulation, walks, plaster, and garage complete 9% Furnace installed 4% Plumbing fixtures installed 10% Exterior paint, light fixtures installed, finish hardware installed 6% Carpet and trim installed 4% Interior decorating 4% Floors laid and finished What is the estimated cost for the Tolstoy's house if they use contractors to complete all of the house? Estimate what the cost of the house would be if the Tolstoys use their talents to do some of the work themselves. Below is a project WBS with cost apportioned by percents. If the total project cost is estimated to be $600,000, what are the estimated costs for the following deliverables? Design? Programming? In-house testing? What weaknesses are inherent in this estimating approach?

Paper For Above instruction

Introduction

The process of project cost estimation is fundamental in effective project management, enabling stakeholders to allocate resources efficiently, plan budgets, and schedule project activities accurately. For residential construction projects, precise cost estimation can determine project feasibility and success. This paper explores various aspects of project cost estimation related to building a house, including direct labor costs, contractor-based costs, and self-performed work, along with an analysis of the inherent weaknesses of these estimation approaches.

Calculating Direct Labor Cost

To determine the direct labor cost for a project team member, such as a construction worker or tradesperson, the key variables include hourly wage rate, hours worked, and overhead rates. Given an hourly rate of $40, 80 hours of work, and an overhead rate of 40%, the total direct labor cost can be calculated as follows:

First, multiply the hourly rate by the number of hours:

$40/hr × 80 hours = $3,200

Next, calculate the overhead cost:

Overhead = 40% of direct labor cost = 0.40 × $3,200 = $1,280

Adding the direct labor cost and overhead provides the total labor cost:

$3,200 + $1,280 = $4,480

Therefore, the total direct labor cost for the project team member amounts to $4,480. This figure helps project managers understand labor expenses, set budgets, and manage project cash flows effectively.

Estimating Total House Construction Cost Using Contractors

The second component involves estimating the total cost of constructing the Tolstoys' house with contractors. The house's size is 2,900 square feet, and the average cost per square foot is $120. Multiplying these values yields the estimated construction cost:

2,900 sq ft × $120/sq ft = $348,000

This raw figure represents the base estimate for contracting the entire project. However, the detailed progress payment schedule provides additional insight into costs associated with specific tasks as they are completed. Each percentage indicates the proportion of the total project cost attributable to various construction stages. For example, excavation and framing constitute 24% of the total, while interior finishing activities account for 4%.

By summing these stages according to their percentages, the total contract cost is confirmed to be approximately $348,000, aligning with the per-square-foot estimate. This parallel validation enhances confidence in the estimate's accuracy when contracting all work to professionals.

Estimating the Cost if the Homeowners Perform Some Work Themselves

In scenarios where homeowners like the Tolstoys perform selected tasks independently, costs are adjusted based on the proportion of work they undertake. The project WBS with cost percentages provides a framework to apportion costs accordingly. If the total project cost remains $600,000, the specific costs for deliverables such as design, programming (possibly referring to electronic or home automation systems), and in-house testing can be estimated by applying their respective percentages:

- Design (e.g., planning and architectural layout): Often a significant portion; assuming around 10% of total costs, estimated at:

$600,000 × 10% = $60,000

- Programming (if referring to smart home systems, security, or automation): Assuming approximately 5%,

$600,000 × 5% = $30,000

- In-house testing (such as inspections or personal assessments): Assuming roughly 4%,

$600,000 × 4% = $24,000

These estimates demonstrate the proportions of the overall budget allocated to each task when homeowners contribute their efforts. Notably, these percentages are approximations; actual costs depend on the scope and complexity of each task, as well as labor rates and material expenses.

Weaknesses of the Estimating Approach

While percentage-based and historical data approaches are practical, they possess several inherent weaknesses. Firstly, they assume that project activities and their associated costs scale linearly, which may not reflect real-world complexities where fixed costs, unexpected delays, and scope changes can significantly impact expenses. Additionally, relying on average percentages ignores project-specific factors such as site conditions, design intricacies, and labor market fluctuations.

Furthermore, this approach often lacks detailed granularity, which can lead to underestimating costs or overlooking potential overruns. The static nature of percentage estimates makes it difficult to adapt to scope changes or unexpected challenges, risking inaccurate budgeting. Moreover, homeowner involvement, while cost-effective, may introduce delays or quality issues if not sufficiently planned and managed.

Finally, such estimation methods do not account for risks, contingencies, or inflation, which are essential for comprehensive project planning. Therefore, while useful for initial approximations, reliance solely on these methods without detailed contingencies can compromise project success.

Conclusion

Effective project cost estimation is vital for successful residential construction projects, balancing accuracy with practicality. Calculating direct labor costs involves understanding hourly rates and overheads, while the use of cost percentages facilitates quick approximations for various project phases. However, these methods have notable weaknesses, including their assumptions of linearity, lack of project-specific detail, and limited capacity to handle uncertainties. Combining these approaches with detailed estimates, risk analysis, and contingency planning is essential for minimizing cost overruns and ensuring project success. The Tolstoys' experience underscores the importance of precision and adaptability in project planning and cost management.

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