Value Engineering

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DESCRIPTION

This assignment has one (1) element – A decision based upon a Life Cycle Cost Analysis regarding the preferred transportation cost, based upon the following scenario and facts”

Congratulations! You have graduated from The Catholic University of America and are embarking on a budding career in the construction industry in the metropolitan Washington, DC area. You have found a convenient apartment close to a METRO station, have secured a job working on-site on a large commercial construction project – expected to last for approximately two years, that is also convenient to the METRO.

You are now faced with your first major decision: What to do about transportation? There are three (3) options that you need to consider at this time, one of which has several variants: Keep your current vehicle, purchase a replacement vehicle, or do without a personal vehicle altogether.

You have learned through Value Engineering that such a decision needs to be thoroughly evaluated and that the best alternative may not be as obvious as one thinks; and the financial considerations are not as simple as the immediate impact to your bank account. At this time you have associated the choices with the following costs:

  • Current Vehicle: 20-year old pickup truck that requires $2,400 in annual maintenance and repair.
  • New ‘Hybrid’ Vehicle: $30,000 purchase price ($375/month for 84-months)
  • New ‘Regular’ Vehicle: $20,000 purchase price ($350/month for 60-months)
  • Used ‘Regular’ Vehicle: $15,000 purchase price ($300/month for 60-months)
  • METRO/Taxi/ZipCar: Alternative transportation with no vehicle ownership ($525/month)

 

Based on this information, make a preliminary determination as to the preferred choice for personal transportation for the next 10-years – the average age of vehicles currently operating in the Country.

REQUIREMENTS

The requirements for completion of this assignment are as follows:

  • Document your calculations (either hand written calculations or calculations using Excel) in the form of a report, including a cover page and a summary (written explanation) of the assumptions, calculations, and rationale used to reach the determination

 

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