Budgeting & Cost Estimation Flashcards
7 cards from real CRC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Budgeting & Cost Estimation flashcards as text
A residential contractor discovers that lumber prices have risen 18% since the original estimate was submitted three months ago. This type of cost variance is best categorized as:
Answer: Escalation risk
Escalation risk refers to price increases in materials or labor between the time an estimate is prepared and when work is performed.
In a residential project schedule, the critical path method (CPM) most directly helps a contractor:
Answer: Identify activities that, if delayed, will extend the project completion date
CPM identifies the sequence of tasks with zero float, meaning any delay on these tasks directly delays project completion.
What is the primary purpose of a cash flow projection in residential construction?
Answer: To determine when funds will be needed and when revenue will be received throughout the project
A cash flow projection shows the timing of expenses and income, helping the contractor manage working capital needs.
A contractor uses the 'RSMeans' cost data reference. This resource is primarily used to:
Answer: Obtain national and regional unit cost benchmarks for materials and labor
RSMeans provides unit cost data adjusted by geographic location factors for accurate budget benchmarking.
During a residential remodel, the homeowner requests three scope additions after contract signing. The contractor should handle these through:
Answer: Formal written change orders that adjust the contract price and schedule
Written change orders protect both parties by formally documenting scope changes, cost adjustments, and schedule impacts.
What is 'front-loading' in a residential contractor's schedule of values?
Answer: Assigning higher values to early-completion line items to improve early cash flow
Front-loading inflates early line item values so the contractor draws more money in initial pay applications.
A residential contractor's bid includes a $12,000 allowance for flooring. This means:
Answer: A placeholder amount is included pending owner's final material selection
An allowance is a budget placeholder for items not yet fully specified, to be reconciled when selections are finalized.