CBP Estimating & Cost Control Flashcards

Earned Value Management (EVM) uses which three core metrics to assess project cost and schedule performance?

Answer: PV, EV, and AC

EVM is based on Planned Value (PV), Earned Value (EV), and Actual Cost (AC) to measure project performance against baseline.

A Cost Performance Index (CPI) of 0.85 means a project is:

Answer: 15% over budget

A CPI below 1.0 indicates the project is over budget; CPI = 0.85 means only $0.85 of value is earned for every $1.00 spent, signaling a 15% cost overrun.

Which type of cost estimating is typically the LEAST accurate?

Answer: Order-of-magnitude estimate

An order-of-magnitude estimate (also called a ballpark estimate) is prepared with minimal project information and typically has an accuracy range of -25% to +75%.

In construction cost accounting, 'direct costs' refer to:

Answer: Labor, materials, and equipment used on a specific project

Direct costs are expenses that can be directly attributed to a specific project, including labor, materials, and equipment used on that job.

Which procurement method is MOST likely to result in the lowest initial bid price but highest risk of change orders?

Answer: Lump-sum hard bid

Lump-sum hard bids encourage contractors to bid competitively low but may lead to more change orders if the scope is not thoroughly defined.

Retainage in a construction contract is best described as:

Answer: A percentage of each payment withheld until project completion

Retainage is a portion (typically 5–10%) withheld from each progress payment to ensure the contractor completes all work satisfactorily.