1. 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

2. 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

3. 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
= (1+0.03)2 x 1.18 = $79.98
Area
23,000,000
360,000
3076
2603
DR. Nabil Dmaidi

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

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