A cost estimator for a construction company has collected the data found in the file Dat9 21.xlsx describing the total cost (Y) of 97 different projects and the following 5 independent variables thought to exert relevant influence on the total cost: regular or premium wages paid (X1), total units of work required (X2), contracted units of work per day (X3), level of equipment required (X4), and city/location of work (X5). The cost estimator would like to develop a regression model to predict the total cost of a project as a function of these 5 independent variables.
a. Prepare five scatter plots showing the relationship between the total cost of the projects and each of the independent variables. What sort of relationship does each plot suggest?
b. Which combination of the independent variables would you suggest the estimator use? What is the estimated regression equation for this model and what is its adjusted R2 value?
c. Which combination of the new set of six independent variables (that is, X2 plus the five binary variables representing X5) would you now suggest the estimator use? What is the estimated regression equation for this model, and what is its adjusted R2 value?
d. Of the regression models identified in parts b and d, which would you recommend the cost estimator use and why?