CCM Cost Management 4 — Questions and Answers
Question 1: A construction project experiences frequent scope creep. Which cost control tool is most effective for managing approved changes to the budget?
- A cash flow S-curve
- A formal change management system with updated cost baseline (Correct answer)
- A contingency drawdown log
- A resource histogram
Correct answer: A formal change management system with updated cost baseline
A formal change management system ensures all scope changes are evaluated, approved, and reflected in an updated cost baseline.
Question 2: Which of the following is an example of an indirect construction cost?
- Concrete materials for a foundation
- Crane operator wages on-site
- Project trailer and temporary facilities (Correct answer)
- Rebar installation subcontract
Correct answer: Project trailer and temporary facilities
Indirect costs like temporary facilities support the overall project but cannot be attributed to a single specific work item.
Question 3: A project manager receives a cost variance (CV) of -$50,000. What does this indicate?
- The project is $50,000 under budget
- The project is $50,000 over budget (Correct answer)
- The project is $50,000 ahead of schedule
- The project is $50,000 behind schedule
Correct answer: The project is $50,000 over budget
A negative cost variance (CV = EV - AC) means actual costs exceed earned value, indicating the project is over budget.
Question 4: What is the purpose of a 'cash flow forecast' on a construction project?
- To determine the sequence of construction activities
- To project when money will be spent and received to ensure liquidity (Correct answer)
- To allocate indirect costs to specific work packages
- To establish the project's critical path
Correct answer: To project when money will be spent and received to ensure liquidity
A cash flow forecast predicts the timing of expenditures and revenues, helping to identify potential funding gaps and plan financing.
Question 5: Under which circumstances would a construction manager recommend 'fast-tracking' a project, and what cost implication does it carry?
- When costs are over budget; it reduces costs by eliminating phases
- When schedule is compressed; it often increases costs due to parallel work and rework risk (Correct answer)
- When labor is scarce; it reduces crew sizes to speed individual tasks
- When the owner requests scope reductions; it lowers the contract value
Correct answer: When schedule is compressed; it often increases costs due to parallel work and rework risk
Fast-tracking overlaps sequential phases to compress schedule but typically increases costs due to coordination complexity and potential rework.
Question 6: In construction cost estimating, what does a 'unit price' estimate involve?
- Setting a single total price for the entire project scope
- Calculating costs based on quantities multiplied by cost per unit of work (Correct answer)
- Estimating costs using only historical project data without quantity takeoff
- Applying a percentage markup to subcontractor bids
Correct answer: Calculating costs based on quantities multiplied by cost per unit of work
A unit price estimate multiplies measured quantities of each work item by an established unit cost, providing detailed cost breakdowns.
Question 7: A CCM candidate reviews a project's 'cost baseline' versus its 'cost budget.' What is the key difference?
- They are identical terms used interchangeably in CMAA standards
- The cost budget includes management reserves, while the cost baseline does not (Correct answer)
- The cost baseline includes profit, while the cost budget excludes it
- The cost budget is set by the owner; the cost baseline is set by the contractor
Correct answer: The cost budget includes management reserves, while the cost baseline does not
The cost baseline is the approved time-phased budget excluding management reserves; adding management reserves yields the total cost budget.
CCM Cost Management 4
A construction project experiences frequent scope creep.
Which cost control tool is most effective for managing approved changes to the budget?