View the step-by-step solution to: 2-2 Three-point Estimate Problem (a) A project requires the

2-2 Three-point Estimate Problem

(a) A project requires the use of structural steel in several tasks over the 12 month period expected to complete the work. Based on recent experience the most likely price for the material is $0.30/lb. There are, however, price fluctuations over time based on suppliers used and structural steel availability. The most optimistic price estimate is $0.24/lb., and the most pessimistic estimate is $0.62/lb.
Use the three-point estimating process to determine the expected price of the material.

(b) In addition to price fluctuations, it is also uncertain how much of structural steel will be required for the project. Design uncertainties and waste at the project site will affect the amount of structural steel actually needed. The most likely amount required is 40 tons. However, as little as 37 tons and as much as 49 tons might be required. One ton = 2000 lbs.
Use the three-point estimating process to determine to determine the expected amount of structural steel needed for the project?

(c) Using the estimates from 1 & 2, what is the expected cost for structural steel over the life of the project?

(d) Using the "Complex" three-point method, what is the expected cost for structural steel over the life of the project?
Check answers:
Expected price = $0.34 per pound
Expected usage = 41 tons
Expected total cost (simple method) = $28,153 ($27,880 using rounded numbers)
Expected total cost (complex method) = $31,856 ($31,673 using rounded numbers)

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