Wednesday, April 26, 2017

Estimating Promesa Peru Project Costs

We're usually close on our project cost estimates. It's not difficult to do if two key factors are up to date. We use the Excel spread sheet below to do the estimating. This example is the actual estimate for the village of Carrizo Bajo. I forgot to enter a quantity for whiteboard erasers/markers.  Click on it to enlarge.

It all starts with column B, the unit price in Peruvian soles. Those are the prices we have to constantly monitor to keep the spread sheet accurate. Notice we don't have unit prices for school supplies. That's because we haven't been asked to donate school supplies for some time, and it takes a lot of work to check all of the prices for the items that comprise school supplies, such as paper, pens. pencils, scissors, glue, erasers, etc. If we are asked for school supplies we'll have to go through that process.

The other key factor is the exchange rate in cell I1. We check that number daily. The rate has been on a downward trend ever since it reached a high of 3.535 in February 2016. As the rate drops the cost in dollars increases. For example, those same 16 chairs that cost $246.84 now, had a price of $226.63 in February last year. Applying that same percentage difference to whiteboards, shelves and transport amounts to a significant difference in the total project cost. Incidentally, the same applies to donations.

For every $50 donation, we receive $48.25. PayPal takes $1.75. But because we pay the bills in soles, we're receiving less money as the rate drops. In February last year $48.25 gave us 170.32 soles. With today's rate of 3.241 we receive 156.38 soles. Obviously we'd like to see that rate increase. Back to the spread sheet.

With both the unit prices in soles and the exchange rate up to date, all we have to do is enter quantities. The spread sheet calculates all the other numbers. We pay particular attention to the percent numbers in column G. That number tells us if we need to look for different suppliers or different modes of transportation to control costs. Notice in the spread sheet we have a quantity of 3 in transport. That's because we have to hire a motocar, not mototaxi to transport the chairs and tables from the carpenter in Tucume to the village of Carrizo Bajo, a distance of 13 very difficult miles. The further away we operate from Tucume, the more that cost is going to increase.

And speaking of transport, we've just learned that the furniture for Carrizo Bajo and Huaco Quemada will be ready for pick-up on Tuesday May 9, so we should be in those two villages shortly after that.

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