"What's incredulous to me is that they intend to charge $125MM to repair an $80MM machine. Presumably, one could contract a scrap metal outfit to come in and cut it up and remove it, receive X amount of money in return for the scrap yield, and be further ahead ordering a new machine ?!?!"
The cost of repair is not simply the cost of the labor and materials for the repair itself. In order to get access to the machine a rather sizable hole has to dug, which requires reinforcements, etc., etc.; the hole to be dug is about 80 ft in diameter and 80 ft deep, but pilings have to be driven down to keep the hole from collapsing, and retaining walls need to constructed to keep water out. Additionally, the delay of the project itself incurs cost; people get laid off and rehired, plus critical personnel are put on retainer, plus cost of money for a extra year. It's likely that there is no spare seal, and a new one has to be made. That, in itself, is probably not particularly expensive, but the dismantling of the machine to get to the seal, installation of the seal, re-assembly of the machine, testing, etc., are probably the cost driver for the machine repair itself.
The machine itself is unique, building a new one probably incurs a 1 year delay all on its own, and probably will cost more than the original machine. Even if a new is built, the old one will need to be removed from the tunnel, which presumably incurs a large cost of its own; if that part were easy, that would probably have been the approach for the repair itself. I would guess the cost of the actual repair to be on the order of $10M to $30M, and the rest to be attributed to the stuff mentioned above. Note also, that the assembly of the machine when received took about 3-5 months, and while the repair of the machine doesn't require a complete assembly, it's a disassembly/assembly, so possibly 4 months just for that and the testing afterwards.
TTFN
faq731-376
Need help writing a question or understanding a reply? forum1529