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BCEE 464 / BLDG 6851

Fall 2016

ASSIGNMENT ONE SOLUTION

Question 1 Develop a conceptual estimate for a 75,000 m2 student residence complex that is to
be constructed at Concordias Loyola Campus four years from now (i.e. in 2020). University
of Toronto has built a residence complex with a very similar design, having the size of
68,500 m2 back in 2007 at the cost of $8,945,000. Use the data provided in the table below
to develop your cost estimate.
Table 1 Location & time indices for apartment construction in major Canadian cities
2007
2008
2009
2010
2011
Halifax (NS)

123.1

128.9

130.4

131.8

132.1

Montreal (QC)

122

129.9

132.2

134

134.6

Toronto (Ont.)

129.9

139.9

136.8

136.7

137.5

Calgary (AB)

156.8

174.4

160.7

156.6

158.8

Solution:
Estimated cost = previous cost (Toronto 2007)

Location Adjustment factor (Toronto to Montrealin 2007)

Time adjustment factor (Montreal 2007 to Mtl. 2020)


Size adjustment factor
Lets take:
C1 = Location Adjustment factor
C2 = Time adjustment factor
C3 = Size adjustment factor
Location Adjustment factor (C1):
C1= CCI(Toronto index in 2007)/CCI(Montreal Index in 2007)
C1=122/129.9
C1 = 0.939
Time adjustment factor (C1):
Since project is going to be built in 2020 (future), provided data
in table is not enough for calculating C1 and time adjustment
factor must be calculated from the compound interest rate
formula. Therefore, based on available data (2007-2011) interest
rate in case of Montreal could be calculated:
IMtl.2011 = IMtl.2007 (1+i)n
(n=2011-2007=4)
134.6 = 122 * (1+i)4
134.6/122 = (1+i)4 41.1033 = 1+i
i = 0.02487
C2(Mtl

20072020)

= (1+0.02487)n

(n=2020-2007=13)
C2 = 1.376

BCEE 464 / BLDG 6851


Fall 2016

Size adjustment factor:


This factor could be calculated by comparing new building size to
previous one; how many times it is larger or smaller.
C3 = 75000/68500

C3 = 1.095

THEREFORE:
Estimated cost = $8,945,000*0.939*1.376*1.094 = $12,655,476.17

Alternative Solution:
Alternatively, you may find the equivalent index for Montreal in 2020 (using compound interest
rate formula) and use it for a direct conversion from To,2007 to Mtl.2020:

Estimated cost = cost(Toronto 2007)(IMontreal-2020/IToronto-2007)


Size adjustment factor
iMtl = 0.02487

IMtl-2020 = 167.9

Estimated cost = $8,945,000*(167.9/129.9)*(75000/68500) =


$12,659,854.41

REMEMBER: In each of the two approaches depending on how you round-off i (at what
decimal place) your final answer might be slightly different.

Question 2 Consider the project data shown in Table 2.


Table 2 Data from historical projects
Project
Total Cost Size (m2)
1

$277,520

3,950

$240,900

5,300

$259,880

4,260

$254,750

4,918

$265,500

4,500

(a) Determine the cost of a similar project with gross area of 4,600m2 by calculating the
weighted unit cost (Ignore the unit cost adjustment).

BCEE 464 / BLDG 6851


Fall 2016

Solution:
Project

Total Cost

Size (m2)

$277,520

3,950

$240,900

5,300

$259,880

4,260

$254,750

4,918

$265,500

4,500

SUM

Unit
Cost
$70.26
$45.45
$61.00
$51.80
$59.00
$287.52

Max
Min
Mean
WUC

$70.26
$45.45
$57.50
$57.62

Average unit cost(Mean) = 287.52/5 = $57.50/ft2


Weighted Unit Cost = ($45.45/ft2 + 4*57.50$/ft2 + $70.26/ft2)/6
Cost for 4600 sf structures=$57.62/ft2*4600*ft2=$265,052
(b) Apply the unit-cost adjustment (assuming a linear relationship between size & unit cost)
for the project data shown above to estimate the cost of the project with gross area of
4,600m2. (You may either use excel for linear regression or hand-calculate the linear
interpolation between end points.)

Solution
First approach (Using the end points only)
(x1=3,950, y1=$70.26) & (x2=5,300, y2=$45.45)
Assuming a first order linear relationship,
(y-y1)/(x-x1) = (y2-y1)/(x-x1)
(y-70.26)/(x-3950)

=(45.45-70.26)/(5300-3950)=-0.01837

(y-70.26) = -0.01837*(x-3950)
x=4600
y=$58.32/ft2(Unit Cost)
The Cost will be: 58.32*4600=$268,272

Second approach (Linear regression)


Linear regression, using all the nodes (with the aid of
Microsoft Excel e.g.):

BCEE 464 / BLDG 6851


Fall 2016

80
70

Unit Cost($)

60

y = -0.0175x + 137.6

50
40
30
20
10
0
3800

4000

4200

4400

4600

4800

5000

5200

5400

Size(ft2)

y= -0.0175*x + 137.60
size (x) = 4,600
y = $57.1/ft2(Unit Cost)
The Cost will be: 57.1*4600=$262,660

(c) What does the comparison of answers for parts (a) and (b) show?
Results in part(b) are expected to be more accurate since the
effect of size on unit cost adjustment is included. However,
the comparison between the results for this specific problem
shows only around 1%.

Question 3 The cost of a 630 m3 per hour process unit is $950,000. Use the capacity ratios
raised to an exponent method to determine the estimated cost of a similar process unit with
a capacity of 930 m3 per hour.

Solution
Cost of new process unit = Cost of old process unit
(Capacity of new process/Capacity of old process)m

When m is not known, we go with m=0.6


THEREFORE:
Cost of new process unit = 950,000*(930/630)0.6 = $1,200,077