CCC CCC Cost Estimating & Budgeting 1 — Questions and Answers
Question 1: Which estimating method derives costs by scaling a known project's cost to a new project using a capacity or size ratio?
- Parametric estimating
- Analogous estimating
- Factored estimating (Correct answer)
- Definitive estimating
Correct answer: Factored estimating
Factored estimating scales a known project's cost to a new one using equipment or capacity ratios, common in process industries.
Question 2: In AACE terminology, a Class 1 estimate is characterized by what level of project definition?
- 1–15%
- 15–40%
- 65–100% (Correct answer)
- 40–65%
Correct answer: 65–100%
A Class 1 estimate requires 65–100% project definition, providing the highest accuracy and lowest expected error range.
Question 3: What is the primary purpose of a cost baseline in project budgeting?
- To set profit margins
- To measure and monitor cost performance over time (Correct answer)
- To determine contractor bid prices
- To calculate contingency reserves
Correct answer: To measure and monitor cost performance over time
The cost baseline serves as the approved time-phased budget against which actual project costs are measured and performance is monitored.
Question 4: Which budget element covers unforeseen work that is within the defined project scope but not yet identified as specific tasks?
- Management reserve
- Contingency reserve (Correct answer)
- Profit margin
- Escalation allowance
Correct answer: Contingency reserve
Contingency reserve addresses known-unknown risks within project scope, while management reserve covers unknown-unknown events.
Question 5: When preparing a conceptual estimate, a cost consultant would most likely rely on which data source?
- Detailed vendor quotations
- Historical cost databases and capacity ratios (Correct answer)
- Final engineering drawings
- Subcontractor bids
Correct answer: Historical cost databases and capacity ratios
Conceptual estimates rely on historical databases and parametric ratios because detailed design information is not yet available.
Question 6: What does the term 'allowance' represent in a cost estimate?
- Profit added by the contractor
- A provision for known but unquantified items within scope (Correct answer)
- The contingency for schedule delays
- Tax and insurance costs
Correct answer: A provision for known but unquantified items within scope
An allowance is a provision included in the estimate for known scope items whose quantities or costs have not yet been fully defined.
CCC CCC Cost Estimating & Budgeting 1
Which estimating method derives costs by scaling a known project's cost to a new project using a capacity or size ratio?