A consulting engineering firm is preparing a preliminary cost estimate for a 40-MW advanced combined cycle natural gas-fired power plant. The firm, which completed a similar project in 2012 with a total cost (construction and equipment) of $809.2 million, wants to use a construction cost index to update the construction cost. If the construction cost was assumed to be 25% of the total cost and the index value in 2012 was 8570, estimate the cost of construction for a similar-size plant in 2017 when the index is 9324.
What will be an ideal response?What will be an ideal response?
C2012 = 0.25(809.2 million)
= $202.3 million
Index value in 2012 was 8570
C2017 = 202.3(9324/8570)
= $220.1 million
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