Question 22 of 27

Question 4.3 present-day escalation (2 marks)

Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.

Given. Index ratio (today/1997) = 2.0; 1997 costs from Question 4.2.

1. Escalate each 1997 cost. $$P_{today} = P_{1997} \times 2$$ Drill: $$\boxed{\$10.19\text{M} \times 2 \approx \$20.38\text{ million}}$$ Shovel: $$\boxed{\$123.20\text{M} \times 2 \approx \$246.40\text{ million}}$$ Truck: $$\boxed{\$3.70\text{M} \times 2 \approx \$7.40\text{ million}}$$

Realism check. The drill and truck figures land in a broadly plausible present-day range for large rotary blast-hole drills (≈$15–25M for the biggest units) and 300 t-class mechanical-drive trucks (≈$6–9M) — realistic. The shovel figure, ≈$246M for one 53 m³ cable shovel, is NOT realistic (real large cable shovels of this bucket class cost on the order of $20–35M delivered) — a strong signal that a SINGLE blanket 2× index is too crude to apply uniformly across machine classes whose cost structure and escalation drivers differ (exactly the Question 1.3/4.1.4 point about not using one index for every sub-sector); the shovel's power-law formula itself is also being extrapolated well beyond a 53 m³ example bucket size typical of published 1997-era cost curves, compounding the distortion.