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 Constructions 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 project9 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 $0.00. 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 5CY 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 wont 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 $6.0M, 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.