CPC Construction Estimating & Cost Control 2 — Questions and Answers
Question 1: Which cost estimating technique uses historical data from similar completed projects to predict the cost of a new project?
- Parametric estimating
- Analogous estimating (Correct answer)
- Bottom-up estimating
- Three-point estimating
Correct answer: Analogous estimating
Analogous estimating relies on actual costs from previous similar projects as the basis for estimating the current project.
Question 2: A construction project has a Budget at Completion (BAC) of $2,000,000. The Earned Value (EV) is $800,000 and the Actual Cost (AC) is $1,000,000. What is the Cost Performance Index (CPI)?
- 0.75
- 0.80 (Correct answer)
- 1.00
- 1.25
Correct answer: 0.80
CPI = EV / AC = $800,000 / $1,000,000 = 0.80, indicating the project is getting $0.80 of value for every dollar spent.
Question 3: What does the term 'allowance' represent in a construction estimate?
- A penalty clause for schedule delays
- A fund set aside for unknown but anticipated costs (Correct answer)
- The contractor's profit margin
- A discount offered to the owner for early payment
Correct answer: A fund set aside for unknown but anticipated costs
An allowance is a sum included in the estimate to cover costs for items that cannot be fully defined at the time of estimating.
Question 4: In a unit price contract, the owner bears the risk associated with which of the following?
- Unit price errors by the contractor
- Quantity overruns beyond the estimated amounts (Correct answer)
- Contractor labor inefficiency
- Material price increases after bid
Correct answer: Quantity overruns beyond the estimated amounts
In a unit price contract, the contractor is paid per unit of work completed, so the owner bears the risk if actual quantities exceed estimated quantities.
Question 5: Which document formally defines the detailed scope of work and is a primary basis for the cost estimate?
- Request for Information (RFI)
- Scope of Work (SOW) (Correct answer)
- Notice to Proceed (NTP)
- Certificate of Substantial Completion
Correct answer: Scope of Work (SOW)
The Scope of Work defines what is included and excluded from the project, forming the fundamental basis for accurate cost estimation.
Question 6: What is a 'learning curve' effect in construction cost estimating?
- The time it takes a new estimator to learn software
- The reduction in labor cost per unit as workers repeat similar tasks (Correct answer)
- An increase in material costs as the project progresses
- The cost of training new workers on a project
Correct answer: The reduction in labor cost per unit as workers repeat similar tasks
The learning curve effect recognizes that workers become more efficient as they repeat tasks, reducing the labor hours and cost per unit over time.
Question 7: The Estimate to Complete (ETC) using the typical EVM formula assuming future work is performed at the budgeted rate is calculated as:
- BAC - EV (Correct answer)
- BAC / CPI
- (BAC - EV) / CPI
- AC + (BAC - EV)
Correct answer: BAC - EV
ETC = BAC - EV when it is assumed remaining work will be completed at the originally planned (budgeted) rate.
CPC Construction Estimating & Cost Control 2
Which cost estimating technique uses historical data from similar completed projects to predict the cost of a new project?