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Economic Feasibility of Computer Integration in Cost Estimation Process

Economic Feasibility of Computer Integration in Cost Estimation Process. Goldsmith Brothers Insulations. by: Dave Travis Craig Krawiec Aaron Israel Sami Shamma Cesar Brea. company overview.

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Economic Feasibility of Computer Integration in Cost Estimation Process

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  1. Economic Feasibility of Computer Integration in Cost Estimation Process Goldsmith Brothers Insulations by:Dave Travis Craig Krawiec Aaron Israel Sami Shamma Cesar Brea

  2. company overview • GBI is a Mechanical Insulation Company which bids competitively for contracts in the New Jersey and Pennsylvania area • Bidding a maximum number of jobs is essential to GBIís survival

  3. Project description • the objective of the project is to analyze the economic feasibility of investing in computers to reduce the time of an estimation job at GBI

  4. the current scenario • when a potential customer requests a cost estimation for a certain service the workers at GBI currently spend too much time on paper work and hand calculations • current process is very inefficient and costly

  5. economic assumptions • GBI will continue to be awarded approximately $ 1.4 million in contracts per year from in house bids • The % of time savings per job is directly related to an increase in total revenue • Each job yields approximately 5% profit • A computerís useful life is 6 years

  6. general approach • first take measurements over current estimation procedure, and collect data on time to conduct an estimation job • then we evaluate the results of implementing our proposed investment, and compute Money-Time measures to determine the feasibility and savings

  7. data collection • a time study (IE tool) was conducted over the complete estimation process of one job • one worker observed while performing estimation of a single job until completion • breakdown of process into work elements for detailed view • calculations and results

  8. time study results for current method • Work Elements: (min.)1- open and review package => 18.2 2- Take measurements from prints => 131.3 3- Calculations a) total footage => 5.5 b) summary => 15.6 c) calculate bid price => 31.8 d) define scope of bid => 3.6 • Total Estimation Job Time: => 205.9

  9. Duration of element 3b is 15.6 min (8% of total time) • Duration of element 3c is 31.8 min (15% of total time)

  10. our investment suggestion • we recommend the integration of computers that will minimize the job estimation time • through the use of computers GBI will be able to eliminate work elements 3b) and 3c) with an estimated addition of 5 min of data input • Time savings (min): 15.64 (summary) + 31.79 (closing up) - 5.00 (data input) • Net savings per job: 42.4 min (20.6% reduction)

  11. various money-time measures alternative: buy 1 pc - Investment: $7,399 - MARR: 6%(fixed)- Increased Productivity: $13,240/yr - Salvage value: $715.8- Useful life: 6 years

  12. required gross revenue at various marrís (1 pc)

  13. required gross revenue at various marrís (1 laptop & 1 computer)

  14. implementation of investment proposal An Excel Database for the desired application was developed by the group members to start the implementation of our proposal at GBI The databaseís main function is to do calculations such as total footages and reference material costs (based on two dimension parameters) Time to train workers estimated to be 8 hrs. Annual cost for data storage and maintenance estimated to be: $ 759.5

  15. problems encountered - Finding information on software that would fit our purposes (do desired calculations) - Small Business: profit target and desired MARR hard to define

  16. conclusions - The current bidding process at GBI is very time consuming - Through a systematic economic analysis of GBIís cost estimations, we were able to quantify inefficiencies of the current bidding process, and evaluate the feasibility of investing in computers to improve the current procedure - GBI should invest in computers and will be able to cut the time to do estimations significantly (and thus increase its profits)

  17. - As engineers we can measure the performance of a given process, and develop ways to improve it - Engineering economics skills are very important tools in making the right decisions that will result in higher profits for the company the end

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