What is your opinion of Sean’s approach to creating a WBS and estimating project costs? Please elaborate.

Sean Shawn was recently appointed project planner at Barrage Construction Company, which specializes in custom-made garages. He had worked for 2 years in the HR department while completing his MBA and now has a desk in the newly created project office. Barrage is considering branching out to building standard two-car and three-car garages as well as its usual customized garages and asked Sean to determine the feasibility of moving into this market. Skimming a book on project management, he discovered the WBS concept and decided it would be helpful for developing cost estimates for the standard garages. He had never worked on a garage construction project but felt he knew the process well enough from having talked to company employees. He sat down and drew the WBS in Figure 6.18. To estimate costs for each work category in the WBS, he reviewed company cost records from three recent two-car garage projects he thought similar to standard garages, computed the average, and then apportioned the costs among the categories in the WBS. The company had no actual cost records for a three-car garage, so as an estimate, he increased the estimate for the two-car garage by 50 percent. When he summed the costs for all the categories, he arrived at a total of $43,000 for a two-car garage and $64,500 for a three-car garage. Compared to competitors, he discovered, these costs were 10 percent higher than their prices. However, because his estimates had been based on custom garages, he believed they might be at least 20 percent higher than for standard garages. He thus reduced his estimate by 20 percent and concluded that Barrage would be able to price its garages competitively and still make a 10 percent profit.