Bristol Landscaping Solutions (BLS) has been operating in the Bristol area since 2017 and has seen consistent growth over the past 4 years. Currently, BLS is bidding to landscape a section of public gardens, and if successful, it could lead to more contracts for the company. It's crucial for BLS to submit a competitive bid. The initial estimate was prepared by the Project Coordinator using market prices and standard charges.
Topsoil
£1, 200
Paving Stones
£3,000
Shrubs
£4,500
Fountain
£6,000
Labour
£2,400
Equipment
£600
Overheads
£2,500
TOTAL COST 20,200
The following information has also been provided:
The company has a stock of topsoil sufficient for this project, but the cost of topsoil has risen by
8% since the initial estimate.
There are leftover paving stones from a previous project, which the company plans to sell to a local supplier for £2,000, as they have no other use with these stones.
The price for the shrubs quoted in the above estimate is the current market value. BLS has half of the required shrubs leftover from another job. If these aren't used, they will be discarded.
The price for the fountain is the standard rate from their regular supplier.
BLS doesn't have available labour capacity, so they need to hire two additional workers for this project. Each will work 35 hours at a rate of £40 per hour.
The equipment needed for this project is a trencher. The £600 represents the depreciation charge on this equipment for the project duration. If not used for this project, the equipment can be rented out, generating £400. The overheads represent the standard charge which BLS applies to all jobs to help recover general overheads.
Required:
Using relevant costing, produce a revised cost estimate for the project. You are required to provide a schedule showing the revised cost estimate for each item along with a brief explanation why you have OR have not included it.