Consumer price index (CPI) and Producer Price Index (PPI)

1. Consumer price index (CPI) and Producer Price Index (PPI) are the key indicators to measure the price changes in the economy. Write a short essay (no more than 600 words) to introduce these two indices.

2. In 2012, BUILDWELL introduced a new model of construction plant which allows her to save $5,000 in diesel costs per year. What’s the worth of installing this new construction plant in 2012 dollars? ?Calculate the answers with the cash flow elements in?a). Constant dollars, and?b). Actual dollars?(Assumption: Inflation-free interest rate: 5%; General inflation rate: 2%; Expected life of this new plant: 25 years)

3. Describe the advantages and disadvantages of using IRR method in engineering economic analyses (no more than 800 words).

Question 1

You have won a contract to supply 330 precast concrete units for a replacement bridge. You estimate the production cost for each unit to be $50,000. A planned production schedule has been agreed with the client and is given in the table below (14 months total).

During production you monitor the number of units produced and your actual costs, details are summarised in the table below. At the end of month 8 your CEO asks for a review.

A)-Complete an earned value analysis using the information provided. Plot the BCWS,

ACWP and BCWP on a graph at a suitable scale.

B)- Calculate the Cost Performance Index (CPI) and Schedule Performance Index (SPI).

C)- Calculate the Critical Ratio (CR) and the Estimate at Completion (EAC).

D)- Interpret the results

Question 2

Discuss the difficulties involved in the Benefit-cost analysis