Birla Institute of Technology & Science, Pilani

Work-Integrated Learning Programmes Division

Second Semester 2014-2015

Assignment-1

(EC-1)

Course No. : AETT ZG523

Course Title : Project Management

Weightage : 5%

Submission date : 20-June 2015

Sean Shawn was recently appointed project planner at the Barrage Construction Company, which

specializes in custom-made garages. He had worked for 2 years in the companys human resources

department while completing his MBA and was now in the newly created project office.

Barrage is considering branching out to building standard two-car and three-car garages as well as

custom-designed garages. Sean was asked to determine the feasibility of moving into the standard-

garage market. Skimming a book on project management, he discovered the WBS concept, which

he thought would be helpful for developing cost estimates for the standardized garages. Even

though he had never worked on a garage construction project, he felt he knew the process well

enough just from having talked to people in the company. He sat down and drew the WBS in the

table given below. To estimate the costs for each work category in the WBS, he reviewed cost

records from three recent two-car garage projects that he thought were similar to standard garages

and computed the average. He then apportioned these costs among the categories in the WBS. For a

three-car garage, he increased the cost estimates for the two-car garage by 50 percent. When he

tallied the costs for all the categories he arrived at a total of $143,000 for a two-car garage and

$214,500 for a three-car garage. Compared to competitors, he discovered, these costs were more

than 10 percent higher than their prices. However, he believed because his estimates had been based

on custom garages, his cost figures were probably at least 20 percent higher than for standard

garages. He thus lowered all his estimates by that percentage and concluded that Barrage would be

able to price its garages competitively and still make a 10 percent profit.

Site Construction Electrical Finish up Excavation Foundation Floor

Walls Roof Windows Doors

Lights Door opener

Paint Clean up

QUESTION

What is your opinion of Seans approach to creating a WBS and estimating project costs? Please elaborate.

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