Cost Estimating & Financial Management Flashcards
6 cards from real Construction Management practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Cost Estimating & Financial Management flashcards as text
Earned Value Management (EVM) calculates Schedule Performance Index (SPI) as:
Answer: Earned Value ÷ Planned Value (EV/PV)
SPI = EV/PV; a value below 1.0 indicates the project is behind schedule relative to the planned baseline.
In Earned Value Management, a Cost Performance Index (CPI) of 0.85 means:
Answer: For every $1 spent, only $0.85 of budgeted work is accomplished
CPI = EV/AC; a CPI of 0.85 signals the project is over budget — $1.18 is being spent for every $1.00 of budgeted work completed.
A construction project's contingency budget is best described as:
Answer: A reserve for identified and unidentified risks within the project scope
Contingency is a planned reserve within the project budget to cover cost growth from known risks and unforeseen scope uncertainties, not for profit or scope changes.
The term 'cost-to-complete' (CTC) in project financial management refers to:
Answer: The estimated cost needed to finish the remaining work
Cost-to-complete is a forward-looking forecast of expenses required to finish all remaining project activities, used to update the Estimate at Completion (EAC).
Which document does a contractor typically submit monthly to request payment for completed work?
Answer: Application for payment (pay application)
A monthly application for payment, referencing the Schedule of Values, is the standard mechanism for contractors to formally request compensation for work completed.
Break-even analysis in construction helps a contractor determine:
Answer: The minimum revenue required to cover all fixed and variable costs
Break-even analysis identifies the volume of work or revenue at which total costs equal total income, with no profit or loss, guiding pricing and capacity decisions.