Construction Cost Estimating & Building Materials Flashcards

What does 'replacement cost' mean in the context of insurance appraisal?

Answer: The cost to rebuild the structure with materials of like kind and quality at current prices

Replacement cost in insurance appraisal refers to the cost to rebuild the structure using materials of like kind and quality at current market prices, without deduction for depreciation.

Which cost estimation method calculates construction costs based on the building's square footage multiplied by a cost-per-unit figure derived from comparable structures?

Answer: Comparative unit method

The comparative unit method estimates construction costs by multiplying the building's square footage by a cost per square foot derived from comparable structures, making it a fast and widely used approach.

In construction cost estimating, what do 'soft costs' refer to?

Answer: Non-construction expenses such as architectural fees, permits, and financing costs

Soft costs are indirect project expenses not related to the physical construction work, including architectural and engineering fees, permits, inspections, and financing costs.

What is the primary purpose of a Marshall & Swift (CoreLogic) cost estimating system in insurance appraisal?

Answer: To provide standardized construction cost data for calculating replacement cost values

Marshall & Swift (now CoreLogic) provides standardized construction cost data and estimating tools specifically used by insurance appraisers to calculate replacement cost values.

Which factor most significantly causes local construction costs to differ from national average benchmarks?

Answer: Local labor market conditions and material availability

Local labor market conditions and material availability create significant regional variations in construction costs, requiring location adjustment factors when applying national cost estimates.

In construction cost estimating, what is a 'location factor' or 'cost multiplier'?

Answer: An adjustment factor that accounts for regional variations in construction costs

A location factor is a multiplier applied to base cost estimates to account for regional differences in labor rates, material costs, and other local market conditions.

What does 'functional obsolescence' mean in building cost assessment?

Answer: Loss in value due to outdated design, layout, or features that reduce the building's utility

Functional obsolescence is a loss in value resulting from outdated or inadequate design features that reduce the building's utility or desirability compared to modern standards.