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# V04-37

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Math Expert
Joined: 02 Sep 2009
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16 Sep 2014, 02:55
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35% (medium)

Question Stats:

69% (00:59) correct 31% (01:12) wrong based on 67 sessions

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Corporate Financial Officer: The proposal for our firm’s new office building is unnecessarily extravagant, overly spacious, and ridiculously expensive. The absolute maximum budget for this project is \$9 million.

Building Contractor: Our architects have redrawn the blueprints to remove the atrium and sculpture garden, and our landscape artists have reduced the complexity of the surrounding gardens. We will now be able to complete the project at one-tenth the original estimated cost.

Which of the following, if true, most undermines the soundness of the contractor’s proposal to complete the project as per the corporate financial officer's recommendation?

A. The original estimated cost of the project was \$100 million.
B. The contracting firm was originally hired based on the originality of its atrium design.
C. Corporate officers have already paid a deposit of \$2 million.
D. The firm expects to hire 100 new employees by the time the building project is completed.
E. Architects working on the revised plans did not discard all expensive elements.

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Joined: 02 Sep 2009
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16 Sep 2014, 02:55
Official Solution:

Corporate Financial Officer: The proposal for our firm’s new office building is unnecessarily extravagant, overly spacious, and ridiculously expensive. The absolute maximum budget for this project is \$9 million.

Building Contractor: Our architects have redrawn the blueprints to remove the atrium and sculpture garden, and our landscape artists have reduced the complexity of the surrounding gardens. We will now be able to complete the project at one-tenth the original estimated cost.

Which of the following, if true, most undermines the soundness of the contractor’s proposal to complete the project as per the corporate financial officer's recommendation?

A. The original estimated cost of the project was \$100 million.
B. The contracting firm was originally hired based on the originality of its atrium design.
C. Corporate officers have already paid a deposit of \$2 million.
D. The firm expects to hire 100 new employees by the time the building project is completed.
E. Architects working on the revised plans did not discard all expensive elements.

Situation:A building contractor offers revised blueprints to a client who claims the original plans were too expensive.

Reasoning: Which is the most serious flaw in the contractor’s proposal? The main concern of the financial officer is that the plans are larger, and therefore more expensive, than his firm can afford. Because the financial officer sets the maximum budget at \$9 million, any evidence that the contractor’s new plans will be more expensive than this figure will greatly undermine the soundness of his proposal.
1. If the original cost of the project was \$100 million, then one-tenth of this cost will be \$10 million, which is \$1 million more than the company can afford.
2. The elimination of the atrium does not undermine the soundness of the contractor’s plan, no matter if that design was originally appealing to the corporate officers.
3. The amount of the deposit has no bearing on the final total cost.
4. This option is tempting because it makes it seem as if the firm will need a larger building, but it actually has no bearing on the soundness of the contractor’s plan.
5. The corporate officer did not ask that all expensive elements be discarded, but only that the project cost no more than \$9 million.

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09 Sep 2016, 18:36
I did not understand the explanation here. Could someone please explain me.

I chose E because we have to find the flaw in contractor's reasoning. So If contractor is already using equipment's present over there then the budget said by him is more than what he is asking.

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10 Sep 2016, 07:30
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kavitaa wrote:
I did not understand the explanation here. Could someone please explain me.

I chose E because we have to find the flaw in contractor's reasoning. So If contractor is already using equipment's present over there then the budget said by him is more than what he is asking.

Thank you for pointing out - the question was not properly framed and has been now modified.
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22 Oct 2017, 04:21
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Once again - I feel its a poor quality question. What if the contractor is saying that ITS IMPOSSIBLE to do it below \$10m? He could be saying that " hey ! this is the least that I can work on"" that does not undermine his argument.

If they selected them cos they designed the atrium better than others - now they are not gonna build the atrium.. then it would make the company wanna consider other options . Once again - I not able to understand how A is the answer.

Ashwin
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Joined: 23 Jan 2017
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23 Oct 2017, 19:02
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What the contractor may say is not important here. CFO recommends \$9M as the total budget. Contractor makes some changes in the plan to reduce cost and proposes \$10M, which is still outside the CFO's recommended budget. THIS (i.e. the underlined part) undermines the soundness of the contractor's proposal to complete the project as per CFO's recommendation... because he is basically not able to meet the recommended budget.

Hope this helps!
Re: V04-37 &nbs [#permalink] 23 Oct 2017, 19:02
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# V04-37

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