Homework – Model-Eliciting Activity
Office Space Pricing Model
This problem is to be completed by your entire team. Note: it is a continuation of the office space MEA activity your team completed in lab.
Read the attached memo.
interoffice memorandum
to: Engineering 106 Team
from: Pat Sweeney, Real Estate Division Director, Marcus Building Associates
date: 09/27/04
RE: UNit Prices for Foster Tower
Thank you for providing me with a thorough list of features impacting the price of Foster Tower Office Suites and preliminary ideas regarding the design of a pricing model. To move forward with the project, our investors need an estimate of our minimum anticipated profit margin. Your task is to generate a model that management can use to estimate the base price of each type of office suite in Foster Tower. That is, we need to develop a pricing method to estimate.
Your team’s task is to generate a pricing model that we can use to estimate the selling price of each office suite based on basic design features: square footage, number of bathrooms, view, and floor level in the building. Data from Skyline Corner Suites, the other new building in the area of comparable value, will be provided. Your team is to create a reusable Excel spreadsheet that allows us to input values for unit design and compute a price estimate. Write a description of your model for estimating the price of office suites so we can use it for future projects in the area. Be sure to note any data you chose NOT to consider when creating your model and explain why.
Thank you,
Pat Sweeney
Task:
Your team must produce a general procedure, in the form of an Excel worksheet, to compute the base price of office suites for different unit configurations. Your worksheet should be easy to use and easily understood by members of upper-level management.
The Skyline Corner Suites data can be found in a file called skyline_corner_data.xls.
Your team’s final report, written in a Word document not to exceed 2 single-spaced pages, must include the following:
· A description of the office suite features your team has taken into account in your pricing model. Be sure to note any features you chose NOT to consider when creating your model, and provide rationale for why you chose not to include them.
· An explanation of how the base price of an office suite is estimated by your model; that is, a description of how your model works. This could include a description of how each feature contributes to the base price.
· The procedure your team used to develop your pricing model (including rationale for why you designed your pricing model the way you did).
· A discussion of the limitations of (1) your team’s final pricing model and (2) your team’s process for developing the model.
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