The following data is available on a project that you are planning. The cost of the items below are expected to follow the beta-pert probability distribution. Item Lowest Cost Most Likely Cost Highest Cost Imported Raw Materials $50,300 $80,000 $90,000 Local Raw Materials $95,500 $105,400 $190,000 Fabricated Materials $10,000 $18,000 $20,000 General Manpower $30,000 $40,000 $70,000 Training $10,000 $15,000 $20,000 A firm cost has been negotiated for the following items required. Item Negotiated Cost Office Rental $13,500 Machine Rental $28,000 Office Supplies $8,800 Electricity $20,000 Waste Disposal $7,500 For the following items, the unit costs have been negotiated and the estimated quantities required are: Item Unit Cost Quantity Estimated Safety Signages $25 200 Paint Set $80 315 MPM502 (October 2021 Examination) Page 3 of 4 Cabling $22 632 Storage Containers $55 83 You will be appointed as the Project Manager and 3 more of your colleagues would be involved in the project on a full time basis but with differing duration. The project is scheduled to last for 6 months. Below is the total remuneration of yourself and your colleagues on a monthly basis. Personnel Total Remuneration per month Duration of Involvement Yourself $10300 6 months Colleague A $8500 3 months Colleague B $6300 4 months Colleague C $4200 6 months a) If all the items required for the project are indicated above, construct the cost estimate for the total cost incurred in the project. [15 marks] b) In an analysis of the project costs estimates, the project team calculated that a contingency reserve of 10% of the estimated project cost should be sufficient to cover any contingencies in the project. The management, however, normally also allocates a management reserve based on the table below to cover any unforeseen circumstances for the project. Project Cost Management Reserves < $0.5 m 15% $0.5m to < $3m 10% $3m to < $5m 5% $5m and above Consult CFO Based on this data, construct a budget that would take into account the risk of the project. [5 marks] c) Explain the purpose of the contingency and management reserves that is included in the budget construction.