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OMG Engineers (OMG)

1. The estimated tender bid for the project is $96,000.

2. The estimated profit on the project is $42,000.

3. Managers at OMG use this information to compare the actual costs incurred with the estimated costs.  This enables them to determine if they can still achieve the same level of estimated profit, control the project's costs, and to benchmark future projects.

Explanation:

a) Data and Calculations:

Markup of total professional (engineering and scientist) labor costs = 80%

Markup of other costs = 50%

Estimated direct costs:

Input Costs Civil engineers 150 hours   $25 000

Environmental scientists 100 hours          15 000

Support labour 120 hours                          10 000

Total direct labor costs                           $50,000

80% markup                                              40,000

Total direct costs                                    $90,000

Other costs:

Travel 1 000 km                      1 000

Computer time 80 hours       2 500

Photocopying, phone, fax        500

Total other costs                 $4,000

50% markup                          2,000         $6,000

Total bid costs                                        $96,000

Estimated project profit:

80% markup on direct labor costs          40,000

50% markup on other costs                      2,000

Total estimated project profit               $42,000