Evaluate the feasibility for future investment

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Reference no: EM132305103

A Client approaches you to evaluate the feasibility for a future investment: a 8500 ft2 single story retail space to be built in Houston, TX (City Cost Index = 86.2) in 2023. The question is, what will be the estimated cost for this project? Searching your internal database you found a 12,500 ft2 similar project built in 2010 in Beaumont, TX (City Cost Index = 81.7). According to your cost records the cost for that project was $900,000, which included $200,000 for cost of land and $50,000 for site improvements and selected backfill due to specific site conditions, not expected in this new project. However, new regulations require an improved fire suppression system that currently cost $75,000.

Calculate the location correction factor.

Calculate the size correction factor using m=0.8.

Calculate the annual escalation rate using the data from the Historical Cost Index for the years 2010-2015.

Calculate the time correction factor.

Calculate the Total Conceptual Cost of the project.

What risk should always be disclosed for any conceptual estimate?

Reference no: EM132305103

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