2.
Reduction in professional labor hours by:
Correcting errors in drawings (7% x 8,000)
560 hours
Value
Added
(1)
Gray
Area
(2)
Nonvalue-
Added
(3)
Total
(4) =
1+2+3
Doing calculations and preparing drawings
75% x $400,000
Checking calculations and drawings
$300,000
$300,000
4% x $400,000
Correcting errors found in drawings
$16,000
$
16,000
7% x $400,000
Making changes in response to requests
$28,000
$
28,000
6% x $400,000
Correcting errors to meet code
$
24,000
$
24,000
8% x $400,000
$32,000
$
32,000
Total professional labor costs
Administrative and support costs at 40%
($160,000/$400,000) of professional
$324,000
$16,000
$60,000
$400,000
Labor
$129,600
$6,400
$24,000
$160,000
Travel
$
18,000
$
18,000
Total
$471,600
$22,400
$84,000
$578,000