Engineering Economics & Cost Estimation Flashcards
6 cards from real BSEM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Engineering Economics & Cost Estimation flashcards as text
Which type of cost remains constant regardless of changes in production or activity level?
Answer: Fixed cost
Fixed costs such as rent or insurance do not change with production volume within a relevant operating range.
The Internal Rate of Return (IRR) is best defined as:
Answer: The discount rate at which NPV equals zero
IRR is the discount rate that makes a project's net present value exactly equal to zero, representing its true yield.
A project's 'life cycle cost' includes which of the following?
Answer: All costs from design through disposal, including operation and decommissioning
Life cycle cost encompasses every cost phase from initial design and construction through operation, maintenance, and eventual disposal.
What is the break-even point in engineering economics?
Answer: The production level at which total revenue equals total cost
At the break-even point, total revenue exactly covers total cost, resulting in zero profit or loss.
Overhead costs in a construction project are best described as:
Answer: Indirect costs not directly attributable to a single work item
Overhead costs—such as site supervision, utilities, and administrative expenses—support the project but cannot be assigned to one specific task.
Which estimating technique divides a project into individual work packages and sums their costs to determine total project cost?
Answer: Bottom-up estimating
Bottom-up estimating builds the total cost by estimating each work package individually and aggregating all values upward.