OMG Engineers is a consulting firm that provides design and support services for civil engineering projects. OMG is in the process of preparing a tender for a project involving the extension of the main highway. The tender involves assessing the economic and environmental feasibility of each alternative.

OMG estimates tender costs by identifying all costs that are likely to be directly associated with the project. To obtain the final tender bid, the total professional (engineering and scientist) labour costs are marked up by 80 per cent, and all other costs are marked up by 50 per cent. These margins are intended to cover any indirect costs plus provide the required profit margin on the project.

The following direct costs has been estimated for the highway project:

Input Costs Civil engineers 150 hours $25 000 Environmental scientists 100 hours 15 000 Support labour 120 hours 10 000 Travel 1 000 km 1 000 Computer time 80 hours 2 500 Photocopying, phone, fax 500