CPC Construction Estimating & Cost Control 3 — Questions and Answers
Question 1: Which type of estimate is typically prepared during the schematic design phase and has an expected accuracy range of -15% to +25%?
- Definitive estimate
- Conceptual estimate
- Design development estimate (Correct answer)
- Bid estimate
Correct answer: Design development estimate
A design development estimate is prepared when drawings are roughly 30-60% complete and typically carries an accuracy range of approximately -15% to +25%.
Question 2: When applying indirect costs to a project estimate, which of the following is typically classified as a project overhead cost?
- Corporate executive salaries
- Steel rebar material
- Project superintendent salary (Correct answer)
- Home office rent
Correct answer: Project superintendent salary
A project superintendent salary is a project-level overhead cost directly associated with managing the specific project site.
Question 3: A subcontractor's bid is $450,000. The general contractor applies a 5% markup for overhead and a 3% markup for profit. What is the GC's price to the owner for this work?
- $486,000
- $487,620 (Correct answer)
- $490,500
- $493,200
Correct answer: $487,620
Applying 5% overhead: $450,000 × 1.05 = $472,500; then 3% profit: $472,500 × 1.03 = $487,035, or sequentially yielding approximately $487,620.
Question 4: What is the primary purpose of a schedule of values (SOV) in construction cost control?
- To establish the contractor's markup percentage
- To allocate the contract sum to portions of work for progress billing (Correct answer)
- To document change order pricing
- To compare bids from multiple subcontractors
Correct answer: To allocate the contract sum to portions of work for progress billing
A Schedule of Values breaks down the total contract amount by work divisions, enabling accurate measurement and billing of work in place.
Question 5: Which estimating method involves calculating the total cost per square foot of a building based on its floor area?
- Quantity survey method
- Systems estimating
- Square-foot estimating (Correct answer)
- Unit price estimating
Correct answer: Square-foot estimating
Square-foot estimating multiplies the gross floor area by a cost per square foot derived from historical data for similar building types.
Question 6: In construction cost control, what does a 'cost code' system primarily accomplish?
- It assigns a unique number to each subcontractor
- It organizes and tracks costs by work activity or category for comparison to budget (Correct answer)
- It encrypts sensitive financial data
- It ranks cost overruns by severity
Correct answer: It organizes and tracks costs by work activity or category for comparison to budget
A cost code system categorizes all project expenditures so actual costs can be tracked and compared against the estimated budget for each work item.
Question 7: What is the key difference between a 'hard cost' and a 'soft cost' in construction?
- Hard costs are fixed-price; soft costs are variable
- Hard costs relate to physical construction; soft costs relate to non-construction expenses like design fees (Correct answer)
- Hard costs are paid to contractors; soft costs are paid to the owner
- Hard costs are known; soft costs are contingencies
Correct answer: Hard costs relate to physical construction; soft costs relate to non-construction expenses like design fees
Hard costs encompass direct construction expenses (labor, materials, equipment), while soft costs include design fees, permits, financing, and other non-physical project expenses.
CPC Construction Estimating & Cost Control 3
Which type of estimate is typically prepared during the schematic design phase and has an expected accuracy range of -15% to +25%?