Nicole is an engineer on temporary assignment at a refinery operation in Seaside. She has reviewed a cost estimate for $430,000, which covers some new processing equipment for the ethylene line. The equipment itself is estimated at $250,000 with a construction cost factor of 0.30 and an installation cost factor of 0.30. No indirect cost factor is listed, but she knows from other sites that indirect cost is a sizable amount that increases the cost of the line’s equipment. (a) If the indirect cost factor should be 0.30, determine whether the current estimate includes a factor comparable to this value, and (b) determine the cost estimate if the 0.30 indirect cost factor is used.
Nicole is an engineer on temporary assignment at
a refinery operation in Seaside. She has reviewed a
cost estimate for $430,000, which covers some
new processing equipment for the ethylene line.
The equipment itself is estimated at $250,000 with
a construction cost factor of 0.30 and an installation
cost factor of 0.30. No indirect cost factor is
listed, but she knows from other sites that indirect
cost is a sizable amount that increases the cost of
the line’s equipment. (a) If the indirect cost factor
should be 0.30, determine whether the current estimate
includes a factor comparable to this value,
and (b) determine the cost estimate if the 0.30 indirect
cost factor is used.
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