Construction Risk Management Assignment using @Risk software $$ Monte Carlo Stimulation.

Your estimating and project team has been doing material take$-$offs and they, along with

King Construction$$s Vice President for Estimating, Joe Scarponi, have briefed you.

Their briefing is summarized below:

$1.$ Project Approach: Our prospective project superintendent, Albert Jones summed

up the project approach: $$The way to tackle this project is for us to do the slab

demolition and to form and pour the replacement slabs. The client has a short

completion time on this project$9$ months, and we cannot afford delays since we

may already have some weather issues given the time of the year.

$2.$ Concrete Slab Demolition: The team has estimated that the costs for the

demolition and removal of the concrete slabs as follows:

a$.$ Material: For the demolition phase of the project, the material cost is

estimated to be $$0\mathrm{.}00.$

b$.$ Equipment: the equipment cost for the demolition is as follows: Albert

Jones says we need to complete the excavation in $120$ days. He plans to

have one large excavator and front end loader feeding two $5$CY dump

trucks. Each excavator can demolish an average of four slabs a day, but if

the crew and truck teams are not in synch$,$ their productivity may drop to

two slab a day. Conversely, an experienced crew might be able to

demolish up to six slabs a day. Rental Cost on a Caterpillar EX$-300$

excavator with a jack hammer attachment is $$5,000/$week$.$ Rental cost of

$5$ CY dump trucks is $$1,500/$week$.$ Rental Cost on a Front End Loader is

$$2,000/$week$.$ Scarponi estimates the demolition equipment cost as:

Minimum Equipment Cost: $$390,000$

Most Likely Equipment Cost: $$480,000$

Maximum Equipment Cost: $$700,000$

c$.$ Labor: King Construction will have several foremen on the job, but will

hire most of the concrete finishers and laborers locally. The key variable

impacting the labor cost will be productivity. Scarponi estimates that a

a crew of $10$ to $20$ laborers will be needed to support the demolition and

debris removal, and recommends hiring $15$ to start the project. He feels

that he can hire them in Pensacola, but will have to pay them the client

mandated Davis$-$Bacon wages.

$$ Minimum Labor Cost: $$150,000$

$$ Most Likely Labor Cost: $$275,000$

$$ Maximum Labor Cost: $$450,000$

$3.$ Concrete Slab Replacement:

$2$

a$.$ Labor: Albert Jones recommends forming and pouring $4-8$ slabs at a time,

in a checkerboard fashion across the parking apron. He believes this work

will require $50$ to $75$ laborers and concrete finishers. He estimates that

the labor to form the slabs as follows:

$$ Average Crew: $$1,450,000$

$$ Poor Crew: $$1,775,000$

$$ Highly productive Crew: $$1,150,000$

b$.$ Material: The team says that the volume of concrete in the slabs is easy

to estimate, but the issue is how much waste to include in the bid and how

much additional concrete will be required due to the sub base condition

underneath the slab. If the concrete crews are poor, the risk is some of the

concrete will set up before the slabs can be properly finished. In such

cases, the slabs must be removed and re$-$formed and re$-$poured. They

recommend that a wastage factor of no less than $5\%$ be used with $10\%$

being most likely and $20\%$ being worst case. The price of $3500$ PSI

concrete in Pensacola is anticipated to be $$110/$CY$,$ but could fluctuate

from $$100/$CY to $$118/$CY$.$

$$ Lowest Estimated Concrete Cost: $$3,080,000$

$$ Most Likely Concrete Cost: $$3,225,000$

$$ Highest Estimated Concrete Cost: $$3,500,000$

$4.$ Job Overhead: Jones and Scarponi are concerned that the quality of the crews

hired in Pensacola could cause the company to have to put more project foremen

and field superintendents on the project to oversee both self$-$performed but also

subcontracted work. They won$$t know for sure until they hire the personnel once

they begin to mobilize. Scarponi estimates the job overhead at $$275,000$ but it

could go as high as $$400,000.$ Lowest estimated cost for job overhead is

$$200,000.$

Model this problem in Excel and use @Risk $($Excel Add$-$in$)$ simulation to prepare

your best estimate. After that answer the following questions:

$1.$ What will be the most likely cost of this project with $90\%$ confidence?

$2.$ Compare this cost with your earlier estimate $($without using @Risk$)$ and

discuss your findings?

$3.$ If your bid price is $$6\mathrm{.}0$M$,$ would you complete this project in profit$/$loss$?$

Provide all relevant graphs and data $($copy and attach graph from @Risk excel

spreadsheet$).$ PLEASE ENSURE THAT YOUR EXCEL FILE SHOULD BE

CONVERTED TO PDF FILE WHEN YOU SUBMIT YOUR ANSWERS. Use

Triangular distribution.