Document Type

Closed Project

Publication Date

Fall 2009

Instructor

Robert Dryden

Course Title

Advanced Engineering Economics

Course Number

ETM 535

Abstract

As a result of Michigan’s high unemployment rate (the largest in the nation) many small companies are going out of business or struggling to survive. One industry that has been hit particularly hard is the construction industry, and many small construction companies in Michigan have been looking into ways to expand their business and remain profitable. One possible solution to this problem is to pursue construction jobs outside of the state of Michigan, but the profitability of this business model is questionable. The goal of our study is to analyze the profitability of pursuing out-of-state construction projects for a small Michigan based construction company. After identifying the top 5 growing metropolitan areas within 800 miles of Detroit Michigan, we used information from the company regarding project costs that vary by location, and analyzed the profitability for projects in each location, using the company’s MARR of 16%. Based on our NPV model and sensitivity analysis, we have demonstrated that out-of-state projects can be profitable for this company, and were able to recommend one metropolitan area with the highest PW for the company to pursue. In addition, based on the results of our sensitivity analysis, we were able to make recommendations for further cost savings for out-of-state projects and suggestions for future work in this area.

Rights

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Comments

This project is only available to students, faculty, and staff of Portland State University.

Persistent Identifier

http://archives.pdx.edu/ds/psu/22855

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