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ABC General Contractors ABC General Contractors was an established construction company handling small-to medium- sized commercial and industrial construction projects. Some recent projects that the company had completed were a 20,000-square-foot factory building, a four-story office building, and a water filtration plant. TELEVISION TOWER BID The company was now in the process of preparing a bid for a television station for the erection of a 225-foot-high television antenna tower and the construction of a building adjacent to the tower that would be used to house transmission and electrical equipment. ABC was bidding only on the tower and its electrical equipment, the building, the connecting cable between tower and building, and site preparation. Transmission equipment and other equipment to be housed in the building were not to be included in the bid and would be obtained separately by the television station. The site for the tower was at the top of a hill, with the building to be constructed at a slightly lower elevation than the base of the tower and near a main road. Between the tower and building was to be a crushed gravel service road and an underground cable. Adjacent to the building a fuel tank was to be installed above ground on a concrete slab. PREPARATION OF COST ESTIMATES Prior to preparing the detailed cost estimates, ABC's estimator met with the company's general supervisor to go over the plans and blueprints for the job. In addition to preparing a cost estimate, the estimator was to prepare an estimate of the time it would take to complete the job. The television station management was very concerned about the time factor and it had requested that bids be pre-pared on the basis of the normal time and costs for completing the job and also for the fastest time for completing the job and the additional costs that this would entail. The result of the conference between the estimator and general supervisor was to determine that the activities shown in Table I would be necessary to complete the job. It was agreed that the estimator would prepare time and cost estimates for these activities. In addition to determining the list of activities, the estimator and supervisor discussed in some details how these activities could be sequenced as the list of activities in Table I did not necessarily indicate the order in which the work could be performed. In the course of the discussion, the estimator made the following notes. Survey work and procurement of the structural steel and electrical equipment for the tower can start as soon as contract is signed. Grading the tower and building sites can begin when survey is completed. After tower site is graded, footings and an-chors can be poured. After building site is graded and basement ex-cavated, building footings can be poured. Septic tank can be installed when grading and excavating of building site is done. Construction of connecting road can start as soon as survey is completed. Exterior and interior basement walls can be poured as soon as footings are in. Basement floor and fuel tank slab should go in after basement walls. Floor beams can go in after the basement walls and basement floor. Main floor slab and concrete block walls go in after floor beams. Roof slab can go on after block walls are up. Interior can be completed as soon as roof slab is on. Put in fuel tank any time after slab is in. Drain tile and storm drain for building go in after septic tank. As soon as tower footings and anchors are in and tower steel and equipment are avail-able, tower can be erected. Connecting cable in tower site, drain tile, and storm drain can be put in as soon as tower is up. Main cable between building and tower goes in after connecting cable at tower site is in and basement walls are up. Tower site can be backfilled and graded as soon as storm drain, connecting cable, and main cable are in. Clean up tower site after backfilling and grading is done. Backfill around building and grade after main cable is in and after storm drain is in. Clean up building site after backfilling and grading is done. Following his meeting with the general supervisor, the estimator prepared cost estimates and time estimates for completing the various portions of the job. Estimates for both the normal time in which the work could be completed and the fastest possible time along with the corresponding costs were made as shown in Table I. The cost figures in Table I are for the direct labor and equipment use costs only. Estimated costs of materials used in construction and purchased equipment to be installed in the tower are shown in Table II. Company experience had shown that for this kind of job indirect labor and otOer overhead costs could be expected to amount to 65 percent of the direct labor and equipment use cost. The company also customarily added 15 percent to the total estimated cost for contingencies. Using this information, the estimator prepared Analyses for the job: One for the cost of doing the work at the normal rate and one for the cost of doing the job in the shortest pos-sible period of time. Table I Television Tower and Building Construction Time and Cost Estimate. FASTEST TIME ACTIVITY CODE NORMAL TIME DAYS COST ACTIVITY DAYS COST $ $3,270 3,900 19,050 4 6 21 85 4.680 5.490 26,970 85 120 120 25 25 18 21 34 30 Sign contract and complete subcontractor negotiations Survey site Grade building site and excavate for basement Grade tower site Procure structural steel and guys for tower Procure electrical equipment for tower and connecting underground cable Pour concrete for tower footings and anchors Erect tower and install electrical equipment Install connecting cable in tower site Install drain tile and storm drain in tower site Backfill and grade tower site Pour building footings Pour basement slab and fuel tank slab Pour outside basement walls Pour walls for basement rooms Pour concrete floor beams Pour main floor slab and lay concrete block walls Pour roof slab Complete interior framing and utilities Lay roofing Paint building interior, install fixtures, and clean up Install main cable between tower site and building Install fuel tank Install building septic tank Install drain tile and storm drain in building site Backfill around building, grade, and surface with crushed rock Lay base for connecting road between tower and building Complete grading and surface connecting road Clean up tower site Clean up building site Obtain job acceptance 24,930 34,050 5,220 10.800 2,790 9,090 3,150 7,650 2.400 2,940 5,580 5,220 29,250 810 2.760 13,080 540 1.890 1,590 35,010 46,860 5,850 15,300 4,350 12,300 4.620 8,430 2.880 3,330 6,720 5,880 35.400 1,020 4,050 13,620 10 12 10 13 30 42 25 660 8 10 2.250 2.490 2,040 2,550 7,680 4,800 720 630 8,910 7,020 1,500 1,200 ce dd ce Total 5206,250 $269,340 Working days only For direct labor and rental of equipment only Costs are included in Table IT Table II Estimated Cost of Materials and Equipment. ITEM Structural steel and guys for tower Tower electrical equipment and connecting cable Sand, gravel, crushed rock, and cement Lumber and millwork Drain tile and dewer pipe Septic tank, plumbing fixtures, fuel tank, and other hardware Other miscellaneous materials Total COST $ 70,800 21,780 15,330 19,200 10,800 9,900 9,960 $157,770 Assumptions Assume that the project will be lunched on the first business day after celebrating your next birthday There is one 8-hour shift per day, 8:00-16:00, Sunday to Thursday. QUESTIONS 1. What would be the estimated project completion date at a normal rate? (10 Marks) 2. Working at a normal rate, in how many days can the job be completed? What should the bid be on this basis if ABC attempted to obtain a profit of 10 percent before income taxes? (30 Marks) 3. What is the shortest possible time in which the job can be completed? What should the bid be on this basis if ABC attempted to obtain a profit of 10 percent before income taxes? (30 Marks) 4. If the job is obtained and the work is to be completed working at a normal rate, what portions of the work should be supervised most carefully to ensure that the job is completed on time? What portions of the work should be supervised most carefully if the contract is let on the basis of completing the job in the shortest possible time? (20 Marks) 5. If television station management felt that the estimated time for completing the job in the shortest possible period of time was still too long, what could be done? (10 Marks) ABC General Contractors ABC General Contractors was an established construction company handling small-to medium- sized commercial and industrial construction projects. Some recent projects that the company had completed were a 20,000-square-foot factory building, a four-story office building, and a water filtration plant. TELEVISION TOWER BID The company was now in the process of preparing a bid for a television station for the erection of a 225-foot-high television antenna tower and the construction of a building adjacent to the tower that would be used to house transmission and electrical equipment. ABC was bidding only on the tower and its electrical equipment, the building, the connecting cable between tower and building, and site preparation. Transmission equipment and other equipment to be housed in the building were not to be included in the bid and would be obtained separately by the television station. The site for the tower was at the top of a hill, with the building to be constructed at a slightly lower elevation than the base of the tower and near a main road. Between the tower and building was to be a crushed gravel service road and an underground cable. Adjacent to the building a fuel tank was to be installed above ground on a concrete slab. PREPARATION OF COST ESTIMATES Prior to preparing the detailed cost estimates, ABC's estimator met with the company's general supervisor to go over the plans and blueprints for the job. In addition to preparing a cost estimate, the estimator was to prepare an estimate of the time it would take to complete the job. The television station management was very concerned about the time factor and it had requested that bids be pre-pared on the basis of the normal time and costs for completing the job and also for the fastest time for completing the job and the additional costs that this would entail. The result of the conference between the estimator and general supervisor was to determine that the activities shown in Table I would be necessary to complete the job. It was agreed that the estimator would prepare time and cost estimates for these activities. In addition to determining the list of activities, the estimator and supervisor discussed in some details how these activities could be sequenced as the list of activities in Table I did not necessarily indicate the order in which the work could be performed. In the course of the discussion, the estimator made the following notes. Survey work and procurement of the structural steel and electrical equipment for the tower can start as soon as contract is signed. Grading the tower and building sites can begin when survey is completed. After tower site is graded, footings and an-chors can be poured. After building site is graded and basement ex-cavated, building footings can be poured. Septic tank can be installed when grading and excavating of building site is done. Construction of connecting road can start as soon as survey is completed. Exterior and interior basement walls can be poured as soon as footings are in. Basement floor and fuel tank slab should go in after basement walls. Floor beams can go in after the basement walls and basement floor. Main floor slab and concrete block walls go in after floor beams. Roof slab can go on after block walls are up. Interior can be completed as soon as roof slab is on. Put in fuel tank any time after slab is in. Drain tile and storm drain for building go in after septic tank. As soon as tower footings and anchors are in and tower steel and equipment are avail-able, tower can be erected. Connecting cable in tower site, drain tile, and storm drain can be put in as soon as tower is up. Main cable between building and tower goes in after connecting cable at tower site is in and basement walls are up. Tower site can be backfilled and graded as soon as storm drain, connecting cable, and main cable are in. Clean up tower site after backfilling and grading is done. Backfill around building and grade after main cable is in and after storm drain is in. Clean up building site after backfilling and grading is done. Following his meeting with the general supervisor, the estimator prepared cost estimates and time estimates for completing the various portions of the job. Estimates for both the normal time in which the work could be completed and the fastest possible time along with the corresponding costs were made as shown in Table I. The cost figures in Table I are for the direct labor and equipment use costs only. Estimated costs of materials used in construction and purchased equipment to be installed in the tower are shown in Table II. Company experience had shown that for this kind of job indirect labor and otOer overhead costs could be expected to amount to 65 percent of the direct labor and equipment use cost. The company also customarily added 15 percent to the total estimated cost for contingencies. Using this information, the estimator prepared Analyses for the job: One for the cost of doing the work at the normal rate and one for the cost of doing the job in the shortest pos-sible period of time. Table I Television Tower and Building Construction Time and Cost Estimate. FASTEST TIME ACTIVITY CODE NORMAL TIME DAYS COST ACTIVITY DAYS COST $ $3,270 3,900 19,050 4 6 21 85 4.680 5.490 26,970 85 120 120 25 25 18 21 34 30 Sign contract and complete subcontractor negotiations Survey site Grade building site and excavate for basement Grade tower site Procure structural steel and guys for tower Procure electrical equipment for tower and connecting underground cable Pour concrete for tower footings and anchors Erect tower and install electrical equipment Install connecting cable in tower site Install drain tile and storm drain in tower site Backfill and grade tower site Pour building footings Pour basement slab and fuel tank slab Pour outside basement walls Pour walls for basement rooms Pour concrete floor beams Pour main floor slab and lay concrete block walls Pour roof slab Complete interior framing and utilities Lay roofing Paint building interior, install fixtures, and clean up Install main cable between tower site and building Install fuel tank Install building septic tank Install drain tile and storm drain in building site Backfill around building, grade, and surface with crushed rock Lay base for connecting road between tower and building Complete grading and surface connecting road Clean up tower site Clean up building site Obtain job acceptance 24,930 34,050 5,220 10.800 2,790 9,090 3,150 7,650 2.400 2,940 5,580 5,220 29,250 810 2.760 13,080 540 1.890 1,590 35,010 46,860 5,850 15,300 4,350 12,300 4.620 8,430 2.880 3,330 6,720 5,880 35.400 1,020 4,050 13,620 10 12 10 13 30 42 25 660 8 10 2.250 2.490 2,040 2,550 7,680 4,800 720 630 8,910 7,020 1,500 1,200 ce dd ce Total 5206,250 $269,340 Working days only For direct labor and rental of equipment only Costs are included in Table IT Table II Estimated Cost of Materials and Equipment. ITEM Structural steel and guys for tower Tower electrical equipment and connecting cable Sand, gravel, crushed rock, and cement Lumber and millwork Drain tile and dewer pipe Septic tank, plumbing fixtures, fuel tank, and other hardware Other miscellaneous materials Total COST $ 70,800 21,780 15,330 19,200 10,800 9,900 9,960 $157,770 Assumptions Assume that the project will be lunched on the first business day after celebrating your next birthday There is one 8-hour shift per day, 8:00-16:00, Sunday to Thursday. QUESTIONS 1. What would be the estimated project completion date at a normal rate? (10 Marks) 2. Working at a normal rate, in how many days can the job be completed? What should the bid be on this basis if ABC attempted to obtain a profit of 10 percent before income taxes? (30 Marks) 3. What is the shortest possible time in which the job can be completed? What should the bid be on this basis if ABC attempted to obtain a profit of 10 percent before income taxes? (30 Marks) 4. If the job is obtained and the work is to be completed working at a normal rate, what portions of the work should be supervised most carefully to ensure that the job is completed on time? What portions of the work should be supervised most carefully if the contract is let on the basis of completing the job in the shortest possible time? (20 Marks) 5. If television station management felt that the estimated time for completing the job in the shortest possible period of time was still too long, what could be done? (10 Marks)