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Shouldn't the dismantling cost be ignored given that it would be incurred anyways, with or without the project?

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Sidi
Coach
on Feb 20, 2021
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 400+ candidates secure MBB offers

Yes! :)

I hve answered this earlier: https://www.preplounge.com/de/consulting-forum/dismantling-costs-sunk-costs-7303

Cheers, Sidi

Ian
Coach
on Feb 21, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hey Vasco,

Good thinking and absolutely the right way to approach a case. However, remember to be very careful of wording. During a case, make sure to clarify exactly what calculations are expected...this way you'll avoid this misunderstanding if it arrives in a case :)

Clara
Coach
edited on Feb 22, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

This is one of the basic concepts in Econ: sunk costs should not be taken into consideration when assessing new business or workstreams. 

However, careful here, since here they define clearly the KPI tht they want to look into for go-no go, profit margin, and dismantling costs are already embebbed in the profit margin in the problem. 

Hope it helps!

Cheers, 

Clara

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