Cost Estimation Techniques & Methods Flashcards
7 cards from real CEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Estimation Techniques & Methods flashcards as text
Which of the following best describes the 'learning curve' effect in cost estimating?
Answer: Unit costs decrease by a constant percentage each time cumulative output doubles
The learning curve (or experience curve) quantifies the reduction in labor hours per unit as cumulative production doubles, typically expressed as an 80–90% curve.
Direct costs in a construction estimate typically include which of the following?
Answer: Labor, material, and equipment costs directly attributable to the work
Direct costs are those that can be traced specifically to construction activities — primarily labor, materials, and equipment.
A 'factor estimating' method applies percentage factors to which base cost?
Answer: A major purchased equipment or installed equipment cost
Factor estimating (e.g., Lang factor, Hand factor) multiplies purchased or installed equipment cost by empirically derived factors to estimate total facility cost.
What is the key difference between a 'fixed-price' and a 'cost-reimbursable' contract from an estimating risk perspective?
Answer: Fixed-price transfers cost risk to the contractor; cost-reimbursable retains risk with the owner
Under a fixed-price contract, the contractor absorbs cost overruns, so the estimate becomes a risk management tool; under cost-reimbursable, the owner pays actual costs.
Which statistical technique is most commonly used to validate a parametric CER by measuring how well the equation fits historical data?
Answer: Coefficient of determination (R²)
R² measures the proportion of variance in cost explained by the CER's independent variable(s); an R² close to 1.0 indicates a strong fit.
An estimator uses 'vendor quotes' for major equipment rather than parametric factors. What is the primary advantage of this approach?
Answer: It provides project-specific pricing that reflects current market conditions
Vendor quotes reflect actual current pricing, equipment-specific configurations, and market conditions, making them more accurate than historical factors.
In the context of cost estimating, what does 'basis of estimate' (BOE) documentation primarily provide?
Answer: A record of the scope, assumptions, methodologies, and exclusions used to develop the estimate
The BOE documents everything needed to understand, reproduce, and update the estimate, including scope boundaries, pricing sources, and key assumptions.