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Q3. You are the Project Manager for a building project that just started operations this week. At the end of this week, you have a
Q3. You are the Project Manager for a building project that just started operations this week. At the end of this week, you have a meeting with your Project Director and he wants to know how much money should the company set aside now and each year throughout the project to cover the expected cost of building commissioning. Your boss wants an equal amount the company can set aside each year for 4 years to cover this. The cost of commissioning ranges between 0.75% and 1.25% of the total cost of the project depending on the level of difficulty. The project is worth 7M and is projected to take exactly 4 years to complete. Current interest rates are 3.33%. Because you do not know the level of complexity involved in commissioning, provide 3 estimates for your boss based on 0.75%, 1% and 1.25% cost of commissioning (low, medium and high complexity). (10 points)
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