Project : Student Residence New Project Desired Capacity = 750,000 sq. ft Expected Completion = End of 1998 Location = St. Louis, Missouri Similar Project Capacity = 360,000 sq. ft Completion Date = Jan 1, 1993 Location = New York, NY Cost = 23,000,000 DR. Nabil Dmaidi

Information What is the expected cost in St. Louis? Cost Index New York Jan 1993 = 2603 Cost Index New York Jan 1997 = 3076 Cost Index St. Louis Jan 1997 = 2390 What is the expected cost in St. Louis? DR. Nabil Dmaidi

Solution Cost Unit Cost (New York) UP1 = = = $63.89/sq. ft. 1. Time Adjustment New York  Ratio = = 1.18 Assuming escalation rate at 3% / year Project unit cost at the end of 1998 = 63.89 (1+0.03)2 x 1.18 = $79.98 Area 23,000,000 360,000 3076 2603 DR. Nabil Dmaidi

Solution (cont.) 2. Location Latest CI for NY = 3076 Latest CI for St. Louis = 2390 Ratio = = 0.78 Base Unit Cost (St. Louis) = 79.98 x 0.78 = 62.38 2390 3076 DR. Nabil Dmaidi

Solution (cont.) 3. Size UP2 = UP1 ( )x-1 = 62.38 ( )0.6 -1 Q2 Q1 = 62.38 ( )0.6 -1 = 62.38 x 1.16 = 72.36 Q2 Q1 250,000 360,000 DR. Nabil Dmaidi