Reference no: EM132232743

You are the project manager for a manufacturing company that is considering a new manufacturing line with target completion date by end-of-year 2017. Working with the Engineering and Purchasing members of your project team to develop a preliminary cost of this line for the company capital budget, you determine that the total delivered cost of the major equipment items will be $9.2 M at the time of receipt in mid-year 2017. This total cost was developed from vendor estimates received by Purchasing and inflated to 2017 dollars by applying the projected manufacturing cost inflation indices for years 2014 thru 2016. Using the “factored (delivered) equipment cost” method, determine the preliminary estimate of total cost for the new line. The Engineering member of the team advises that the historical 3.5 factor applies. Also, he advises that 15 percent should be allowed for engineering costs and 10 percent for contingencies, respectively. No additional infrastructure is required. Find the estimated plant cost.