Engineering
You have been asked to prepare a quick estimate of the construction for a coal-fired electricity generating plant and facilities. It is expected that approval, planning and construction will take two years (i.e. the plant should be completed in 2019). A work breakdown structure (WBS) is shown in Table 2 (level one through three). You also have the following information available.
• A coal-fired generating plant twice the size of the one you are estimating was built in 1993. The 1993 boiler (WBS item 1.2) and boiler support system (1.3) cost $190 million. The cost index for boilers was 191 in 1993 (July); it was 745 in 2016 (July); it is expected that inflation will be about 2.8% for the next three years. The 250 hectare site is on property already owned by your client, but improvements (1.1.1) and roads (1.1.2) will cost $1,100 per hectare; and railways (1.1.3) will cost $4,200,000. Project integration (1.9) is projected to cost 3% of all other construction costs.
The security systems are expected to cost $850 per hectare, according to recent (2016) construction of similar plants. All other support facilities and equipment (1.5) are to be built by Duke Engineering. Duke Engineering has built the support facilities and equipment elements for two similar generating plants. Their experience is expected to reduce labour requirements substantially. Duke built the support facilities and equipment on their first job in 95,000 hours, but with an assumed 90% learning rate it is estimated that only 80,400 hours will be required this time. Duke’s labour rate will be billed to you at $90 per hour. Duke estimates that materials for the construction of the support facilities and equipment elements (except (1.5.4) will cost you $21,000,000.
• The coal storage facility (1.4) for the coal-fired generating plant built in 1993 cost $8,600,000. Although your plant is smaller, you require the same size coal storage facility as the 1993 plant. You may assume you can apply the cost index for similar boilers to the coal storage facility.
Estimate the 2017 cost of building the coal-fired generating facility.
Summarise your calculations in a cost estimating spreadsheet.
State all assumptions that you have made, and where these are in addition to those stated above provide a BRIEF reason for them.
• A coal-fired generating plant twice the size of the one you are estimating was built in 1993. The 1993 boiler (WBS item 1.2) and boiler support system (1.3) cost $190 million. The cost index for boilers was 191 in 1993 (July); it was 745 in 2016 (July); it is expected that inflation will be about 2.8% for the next three years. The 250 hectare site is on property already owned by your client, but improvements (1.1.1) and roads (1.1.2) will cost $1,100 per hectare; and railways (1.1.3) will cost $4,200,000. Project integration (1.9) is projected to cost 3% of all other construction costs.
The security systems are expected to cost $850 per hectare, according to recent (2016) construction of similar plants. All other support facilities and equipment (1.5) are to be built by Duke Engineering. Duke Engineering has built the support facilities and equipment elements for two similar generating plants. Their experience is expected to reduce labour requirements substantially. Duke built the support facilities and equipment on their first job in 95,000 hours, but with an assumed 90% learning rate it is estimated that only 80,400 hours will be required this time. Duke’s labour rate will be billed to you at $90 per hour. Duke estimates that materials for the construction of the support facilities and equipment elements (except (1.5.4) will cost you $21,000,000.
• The coal storage facility (1.4) for the coal-fired generating plant built in 1993 cost $8,600,000. Although your plant is smaller, you require the same size coal storage facility as the 1993 plant. You may assume you can apply the cost index for similar boilers to the coal storage facility.
Estimate the 2017 cost of building the coal-fired generating facility.
Summarise your calculations in a cost estimating spreadsheet.
State all assumptions that you have made, and where these are in addition to those stated above provide a BRIEF reason for them.
Table 2: Work Breakdown Structure for Coal-fired Electricity Generating Plant and Facilities WBS element code Title Coal-fired power plant 1.1 Site Land improvements Roads, parking and paved areas Railroads 1.2 Boiler Furnace 1.2.1 1.2.2 Pressure vessel 1.2.3 Heat exchange system. Generators 1.2.4 1.3 Boiler support system 1.3.1 Coal transport system 1.3.2 Coal pulverising system. 1.3.3 Instrumentation and control 1.34 Ash disposal system Transformers and distribution 1. Coal storage facility Stockpile reclaim system 14.2 Rail car dump 1.21.3 Coal handling equipment 1.5 Support facilities and equipment 1.5.1 Hazardous waste systems 1.5.2 Support equipment 1.5.3 Utilities and communications system 1.5.4 Security systems Project integration Project management 1.9.1 1.9.2 Environmental management Project safety 1.9.3 1.0.4 Quality assurance Test, start-up and transition management 1.9.5
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