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OMG Engineers is a consulting firm that provides design and support services for civil engineering projects. OMG is in the process of preparing a tender for a project involving the extension of the main highway. The tender involves assessing the economic and environmental feasibility of each alternative.

OMG estimates tender costs by identifying all costs that are likely to be directly associated with the project. To obtain the final tender bid, the total professional (engineering and scientist) labour costs are marked up by 80 per cent, and all other costs are marked up by 50 per cent.

These margins are intended to cover any indirect costs plus provide the required profit margin on the project.

The following direct costs has been estimated for the highway project:

	Input	Costs
Civil engineers	150 hours	$25 000
Environmental scientists	100 hours	15 000
Support labour	120 hours	10 000
Travel	1 000 km	1 000
Computer time	80 hours	2 500
Photocopying, phone, fax		500

Required:

Estimate the tender bid for the project.

Estimate the profit on the project if the bid is successful and all costs are incurred as planned.

Once a project has begun, OMG will use a costing system that tracks all direct costs to projects.

If the highway bid is successful, how would managers at OMG use this information?

Note: If rounding off is required, round off your figures to 2 d.p.

Answer rating: 100% (QA)

Answer 1 Estimated tender bid is 93000 please refer to the working notes belowAnswer 2 Est... View the full answer