Problem Scenario

You have decided that there are not enough beer varieties in the world, and that you are only who can fix this problem. Against the urging of your spouse and friends, you decide to open up a brewery. You have two options: build your own brewery from the ground up or buy an existing one from a fellow dreamer like yourself who has become disillusioned with the business. The existing brewery will need some new equipment and repairs before it can be returned to operation. You must decide whether it is a better investment to build or buy.

Part 1- Estimate Buy Costs

You need to estimate the total cost to purchase the existing brewery up and get it up and running. The owner is asking $1,000,000 for the brewery. You want to increase the production capacity of the brewery by 500 barrels/month which will require another five fermentation tanks. The fermentation tanks cost $10,000 each. In addition to the cost of the fermentation tanks, the company that installs them says they only work on a time and materials contract basis and that their last job was half the size and cost $150,000. Since then, their costs have increased 20%.

What is the best estimate of how much it will cost to purchase and upgrade the existing brewery?

Part 2- Estimate Build Costs

The land you are planning to buy for the brewery is for sale for $100,000. You are planning on contracting out the parts of the job yourself. From the various specialties, you receive the following cost ranges:

Specialty	Optimistic Cost	Most Likely Cost	Pessimistic Cost
Site Preparation & Foundation	$15000	22500	31000
Structure	400000	525000	600000
Utilities	30000	37000	40000
Equipment Install	150000	200000	275000
Finishing	50000	70000	100000

Using three-point estimation, determine the cost estimate to build the brewery.