The total cost of a sewage treatment plant with a capacity of 50 million gallons per day

completed 1981 for a new town in Colorado was $4.5 million. It was proposed that a similar
treatment plant with a capacity of 80 million gallons per day be built in another town in New
Jersey for completion in 1985. For additional information given below, make a screening
estimate of the cost of the proposed plant.

In the total construction cost in Colorado, an item of $300,000 for site preparation is not typical for similar
plants.
The variation of sizes for this type of treatment plants can be approximated by the exponential law with m
= 0.5.
The inflation rate was approximately 5% per year from 1981 to 1985.
The locational indices of Colorado and New Jersey areas are 0.95 and 1.10, respectively, against the
national average of 1.00.
The installation of a special equipment to satisfy the new environmental standard cost an extra $200,000
in 1985 dollar for the New Jersey plant.
The site condition in New Jersey required special foundation which cost $500,00 in 1985 dollars.
* UNIQUE COST FOR OLD PLANT :- $ 300000

So Actual Cost of Old Plant was = $45,00,000 - $ 3,00,000

= $ 42,00,000

* Cost for Variation of Sizes = $42,00,000 x (80/50)0.5

=
$ 53,12,626

* Actual Cost at Colorado = $ 53,12,626 x 0.95

= $50,46995
Inflated cost of Plant at year 1985 @ 5 % per year = $ 50,46995 x (1+0.05)4

= $63,97,401

Actual Cost at New Jersey = $ 63,97,401*1.10

= $70,37,141

+ Standard Cost for Special Equipment = $ 2,00,000

+ Additional Cost for Special foundation = $ 50,000

Total Cost = $ 72,87,141

Location YEAR CAPACITY COST

Colorado 1981 50,000,000 $ 45,00,000
Gallons
New Jersey 1985 80,000,000 $ 72,87,141
Gallons