Cost Estimation Techniques & Methods Flashcards

Which estimating technique uses the cost of a completed similar project as the primary basis for a new estimate?

Answer: Analogous estimating

Analogous estimating relies on historical data from similar past projects to develop a new cost estimate.

In a Rough Order of Magnitude (ROM) estimate, what is the typical accuracy range per AACE International?

Answer: -50% to +100%

ROM estimates (Class 5) typically carry an accuracy range of -50% to +100% due to limited project definition.

What does the term 'should-cost' estimating primarily focus on?

Answer: What a product or service ought to cost based on analysis of labor, material, and overhead

Should-cost estimating independently analyzes the elements of cost to determine what a product or service should cost under efficient conditions.

A cost estimator applies a cost index of 1.35 to update a 2015 estimate to 2025 dollars. This is an example of which technique?

Answer: Escalation adjustment

Escalation adjustment uses published cost indices (e.g., ENR, PPI) to update historical costs to current dollar values.

Which method divides a project into its smallest components and estimates each individually before summing to a total?

Answer: Bottom-up estimating

Bottom-up estimating builds the total cost by aggregating detailed estimates for each individual work element.

The 'phased gate' estimating approach is best characterized by which of the following?

Answer: Refining estimates progressively as project scope matures through defined stage gates

Phased gate estimating recognizes that estimate accuracy improves as scope definition matures, with formal reviews at each stage gate.

When applying the 'six-tenths rule' (exponent factor method), what does an exponent of less than 1.0 indicate?

Answer: Economies of scale — larger capacity costs proportionally less per unit

An exponent below 1.0 indicates economies of scale, meaning doubling capacity costs less than double.