COST ESTIMATION
Approximate Estimates take into consideration...
projected prices, market conditions, and the unique characteristics of the project
Advantages and disadvantages of regression
pros: shorter time to complete, less cost. cons: an estimate, judgement. y = a +bx y= dependent a=intercept (fc) b=slope (vc) x= cost driver
Less than 15% moisture
s-dry wood
contingency reserves
set aside funds for unplanned activities
Relevant range- often thought of as
short run or reasonable range of activity
Indirect costs
site office-weather conditions-transportation-profit
Brick position
stretcher, header, soldier
Cost of Contract Bond
surety bonds are typically required act as guarantee to owner against any default or failure on the part of the contractor during the construction period
bid bond
the _____ _______, if required will be specified in the advertisement for bid and will pay the owner if the contractor is chosen for the project but refuses to sign the contract documents to start the job.
Discuss the advantages and disadvanges of calculating volumes of cut and fill by using the "grid method" rather than by using the "section method."
the grid method provides more thorough results and a paper trail for the intervals, but could be more labor intense than the section method. The section method provides a better visual of the fill and cut areas appears to be simpilar, and does not plot wide areas and is usually used in narrow areas
What is the purpose of a soils report, and how can the information it contains assist the estimator?
the soil reveals information regarding type of soil and moisture content of soil which both impact cost
describe the two methods of pricing equipment transportation expenses
the two methods of pricing equipment transportation expenses for minor items of equipment is recorded in the General Expenses under Trucking and Material Handling and major items are usually priced on an item-by-item basis
The Bidding Period
time is an important consideration careful study and analysis result in lower bid prices and substantial savings for the owner less time results in more guesswork typically results in higher estimates
base rate+payroll burden
total wage rate=
Softwoods
used for framing, sheathing and paneling
Hardwoods
used for furniture, paneling, moldings, finishings
Cost Prediction
using knowledge about cost behavior to forecast costs at a particular level
Bidding Procedures
vary for Public and Private projects conducted by rules and regulations established by owner, with assistance from design professionals can be modified by the public owner
Preliminary estimate
volume and area method
Production
volume per cycle (x) cycles per hour
describe how different materials excavated and different moisture content of these materials affect the price of excavation work
wet materials are heavier so excavating will be slower, the materials can also halt the machines
The notebook is a document that is kept for each estimate period. It should be broken down into several areas: workup sheet, summary sheets, errors and omissions sheets, proposals received from a subcontractor, and note pertaining to the project. it also logs all the calls related to the project such as "time, who, and what has been discussed".
what information is contained in the "notebook"?
quantity takeoff (x) productivity rate
work hours=
Timber
5" or more thick
Lavatory
A bathroom sink
Wythe
CMU
Types of Approximate Estimates
Cost-per-function Square-foot cost Modular takeoff Partial takeoff Panel unit cost Parameter cost
Lump-Sum and Unit-Cost Estimates are considered...
Detailed Estimates
Shrinkage
Loss of volume of soil when compacted in a fill
Construction grade
No. 1 Grade
Owner-contractor agreement is the document that formalizes the construction contract, and it is the basic contract
Owner-Contractor Agreement
Square foot contact area
SFCA is used to describe what
True
The contract sum would be stated in the owner-contractor agreement, a part of the contract documents.
The quantity takeoff is an estimate of in place materials required for the project
The difference between doing a quantity takeoff and doing a filled detailed estimate is:
False
The duration of the project has no bearing on the total cost of the project.
False
The quantity take-off process for masonry uses the volume method
Cost Behavior
The relationship between cost and activity
Foundation
The substructure that supports a building or other structure.
The agreement should include the starting the completion date (calendar day).
Time of Completion
False
To convert from BCY to LCY the shrinkage factor is used and to convert from BCY to CCY the swell factor is used.
rate-hours
To estimate labor costs for any work item, the two components of cost that must be quantified are the labor_____ and the labor_______.
Depth
To find the volume of concrete required for a slab, the area is multiplied by the ______.
Cut
To lower an existing grade
batt blown rigid
Types of insulation
labor
Typically the single largest expense in a detailed construction estimate is ________.
Overtime work, shift work, hazardous work conditions, or unusually strenuous work.
Under what conditions are wage premiums applied
A price is given for each unit of work paid on actual work done
Unit Price
1) Worker compensation 2) Builder's risk fire insurance 3) Property insurance
Using RESIDENTIAL SPECIFICATION DJMUF1278, name and explain three (3) types of insurance that are outlined?
True
Welded wire mesh comes in a variety of wire sizes and spacings
6x6 10/10
Welded wire mesh terminology
RS Means is a division of Reed Business Information that provides cost information to the construction industry so contractors in the industry can provide accurate estimates and projections for their project costs.
What Is RS Means?
Operating costs include everything required to operate each piece of equipment. Fuel, Grease and Oil, Electricity and Tire
What are some of the costs that must be included in equipment operating costs?
The ability to procure the right piece of equipment for the job when the unit is needed
What are the benefits of renting equipment?
Competitive Bidding Negotiated Bidding
What are the two types of bids?
The technical specification includes: The types of the materials required Their required performance The method that must be used to obtain the result.
What information is contained in the technical specifications?
The actual drawing (plan, illustration) contain the dimensions and location of the building elements and the material required, and delineate how the fit they fit together.
What information is contained in the working drawing?
Building Construction Estimating is the determination of probable construction costs of any given project. It is prepare from the contract document (plan and project manual).
What is "Building Construction Estimating'?
The most reliable productivity records are the contractor's own historical data based on actual experiences performing similar work
What is the best source for productivity data?
False
Where the project will be constructed does not have a major influence in the preparation of an estimate.
CSI
Which organization is responsible for the development of the specification format used in building construction?
There may be hesitation to bid a project just before the expiration of a union agreement due to the uncertainty of the outcomes of the negotiations. There is the possibility of a strike or dramatic increases in the prevailing wage rate.
Why do many contractors hesitate to bid just before the expiration of a union contract?
Work in place is usually calculated as the percentage of work that has been completed. And the contractor may receive payments for material that has stored on site or some other mutually agreed upon location.
Work in Place and Stored Materials
BCY- banked cubic yards LCY- loose cubic yards CCY- compacted cubic yards
Write out the name that is represented by the following abbreviations: BCY-LCY-CCY
Independent variable
X term, or predictor on the right hand side of the regression equation
work hours (x) wage rate
bare labor costs
reserve analysis
can be established for both contingency reserves and management reserves within the project
Regression
designed to generate a line that best fits a set of data points. Statistical procedure to determine the relation between variables. The more data you have, the more accurate the estimation.
Advantage to high low method
easy to apply
Conceptual estimate
estimate cost using a unit of measure (cost of one room x # of rooms)
bottom-up estimating
examines costs the project activity level
Bid Depositories
facilities created by a group of contractors or a trade association to collect written bids from subcontractors and material suppliers and convey them to the general contractors after a subcontractor bid or material quotation is submitted to depository, it can be withdrawn before the deadline but not changed, except for clarification or correction of obvious errors
Greater than 15% moisture
green wood
why is hand excavation always measured separately?
hand excavation volume is based on the perimeter of the footings and its depth
Detailed estimate
has everything included price wise
risk register
helps the project team determine and allocate costs against risks identified while reviewing activities within the work breakdown structure
give two examples of situations in which hand excavation may be required
intricate excavation, trimming the bottom few inches of trenches or pits
control account
is a component used to manage costs at an activity level. Each control account receives a unique numbering sequence that ties the activities into an organization's accounting system
earned value
is a measurement of the project's progress to date or the value of the work completed to date
Determine Budget
is a process of aggregating the estimated costs of project activities that drive to a baseline within the project where costs are attributed
decomposition
is a technique that helps further define activities by identifying activities aligned within work packages
parametric estimating
is also known as by the numbers. It refers to statistical relationships between historical data and other information that help calculate cost, budget, and duration estimates
progressive elaboration
is the accumulation of knowledge over time that is applied repeatedly, which results in the individual gaining different levels of experience
sponsor
is the individual or group outside the project team that initiates the project by requesting for the service or product and beginning the project charter
Estimate Cost
is the process of developing approximations for monetary resources required to complete project activities. Depending upon the project size, cost estimating may be coincidental to budgeting; this is especially true of projects that are smaller in scope
In Cost Summaries, the costs include
material costs direct labor costs (hourly wages) indirect labor costs (insurance, taxes, benefits) equipment costs (i.e. hourly rates) ownership and operating costs
PL
moisture content when soil begins to crumble
Subcontractor Bids
often are 70% to 85% of the dollar value of building construction in writing check bids to see that everything is included GC has complete freedom in selecting SCs
high low method
only one which can be solved quickly by hand uses the highest and lowest levels of activity with their associated costs
Least Squares regression method
only used for mixed costs
funding limit reconciliation
pertains to the availability of funding for the project based upon constraints
Instruction to bidders
"Time of completion" usually is found in which section of the project manual
Total fixed cost
( total mixed cost) + (total variable cost)
total variable cost
( variable rate) x (activity level )
Learning Curve
- Pattern of improvement
Bottom-up Approach
- This approach at the work package level can serve as a check on cost elements in the WBS by rolling up - Provide the customer with an opportunity to compare the low cost, efficient method approach with any imposed restrictions
Top down estimates
- Usually derived from someone who uses experiences and/or information to determine the project duration and total cost
Apportion Method
- extension to the ratio method - used when projects closely follow past projects in features and costs - estimates can be made quickly - good to use in projects that are relatively standard but have small variation or customization
Initial top-down method
- not realistic because top management wants the projectdksuhgkrjgn
Consensus method
- simply uses pooled experience of senior or middle managers to estimate the total project duration and cost - usually use the Delphi method
Ratio Methods
- top-down method usually used when estimating the cost of a house
List some top-down approaches for estimating project times and costs?
1) Consensus Methods 2) Ratio methods 3) Apportion Methods 4) Function point methods for software and system projects 5) Learning curves
What kinds of costs are found in a project?
1) Direct costs (labour, equipment, materials etc) 2) Direct project OH costs 3) General and Admin costs (G&A) OH costs
Reasons why estimates can be really off?
1) Interaction costs are hidden 2) Normal conditions do not apply (Resources shortages) 3) Things go wrong on a project (tsunami) 4) Change in project scope and plan 5) Overly optimistic 6) Strategic misrepresentation
Factors Influencing the Quality of Estimates?
1) Planning Horizon (increased accuracy for events occurring sooner) 2) Project Duration 3) People (skills of the ppl making the estimates) 4) Project Structure and Organization (reduced costs in a matrix environment) 5) Padding Estimates (usually pad the estimate to 20% or more) 6) Organization Culture (some padding is tolerated and in some not so much) 7) Other factors like holidays blah blah blah
What are the 7 guidelines that a manager can follow to develop useful work package?
1) Responsibility 2) Use several people to estimate 3) Normal conditions 4) Time units 5) Independence (treat each task as independent) 6) Contingencies 7) Adding risk assessment to the estimate helps to avoid surprises to stakeholders
Similar to Excel, they are often used to augment specialized estimating software packages
1) Spreadsheets
List some bottom-up approaches for estimating project times and costs?
1) Template Methods 2) Parametric procedures applied to specific tasks 3) Range estimating
Bottom-up approaches
1) Template methods 2) Parametric procedures 3) Range Estimating
Top-down disadvatages
1) Time and cost are not considered 2) Grouping may tasks into a common basket encourages errors of omission and the use of imposed times and costs ***Micro estimating costs are usually more accurate than macro methods
What methods are used to estimate cost behavior?
1. Engineering estimates 2. Account analysis 3.Statistical methods, such as regression analysis
Steps to identify high low cost equation
1. Identify the high and low points (high cost-high output, low-low output) 2. Calculate the variable cost per unit. high cost - low cost / high vol. - low vol. 3. Calculate fixed cost Total cost (h) or (l) - (vc per unit * output (h) or (l) 4. Form the cost equation TC = TFC + vc per unit (X)
Advantages to engineering approach
1. It can detail each step required to perform an operations/ 2. Enables the company to review its productivity and identify specific strengths and weaknesses. 3. Does not require data from prior activities in the org.
Answer D This question is asking for the formula for EAC, which is BAC/CPI. Notice how you will have to remember the formula to get the answer correct.
1. One common way to compute estimate at completion (EAC) is to take the budget at completion (BAC) and: A. Divide by SPI B. Multiply by SPI C. Multiply by CPI D. Divide by CPI
Disadvantages to engineering approach
1. expensive to use because it analyzes each activity involved in the business. 2. often based on optimal conditions.
Answer C Earned value questions ask for a calculation or an interpretation of the results. See the tricks under this topic in this book.
10. A schedule performance index (SPI) of 0.76 means: A. You are over budget B. You are ahead of schedule C. You are only progressing at 76 percent of the rate originally planned D. You are only progressing at 24 percent of the rate originally planned
Answer D A change control system is not required to obtain estimates, but without the other three choices, you cannot develop the estimates. You need the WBS to define the activities, the network diagram to see the dependencies, and the risks to determine contingencies. NOTE: These are high-level risks, not the detailed risks we identify later in the planning process group.
11. Which of the following is NOT needed in order to come up with a project estimate? A. A WBS B. A network diagram C. Risks D. A change control system
Answer A Parametric estimates use a mathematical model to predict project cost or time.
12. Which of the following is an example of a parametric estimate? A. Dollars per module B. Learning bend C. Bottom-up D. CPM
Answer D This estimate has a wide range. It is done during project initiating, when very little is known about the project.
13. A rough order of magnitude estimate is made during which project management process group? A. Planning B. Closing C. Executing D. Initiating
Answer C A cost baseline is an output of the Determine Budget process.
14. A cost baseline is an output of which cost management process? A. Estimate Activity Resources B. Estimate Costs C. Determine Budget D. Control Costs
Answer A Budget forecasts are an output of Control Costs, which is part of monitoring and controlling.
15. During which project management process group are budget forecasts created? A. Monitoring and controlling B. Planning C. Initiating D. Executing
Answer A You are training the team on skills required for the project. The cost is directly related to the project and thus a direct cost.
16. Which type of cost is team training? A. Direct B. NPV C. Indirect D. Fixed
Answer B Setup costs do not change as production on the project changes. Therefore, they are fixed costs.
17. Project setup costs are an example of: A. Variable costs B. Fixed costs C. Overhead costs D. Opportunity costs
Answer D Notice that you need to know the definition of value analysis to answer this question. Also notice that the other choices could be considered correct by someone who does not know the definition.
18. Value analysis is performed to get: A. More value from the cost analysis B. Management to buy into the project C. The team to buy into the project D. A less costly way of doing the same work
Answer C If the costs are more than expected under a fixed price contract, the seller must pay those costs. As explained in the Procurement Management chapter, "cost risk" refers to the person who will have to pay for the added cost if costs escalate. Because the price is fixed, the seller will have to pay any increased costs out of their profit. Naturally, this does not include increased PRICE due to change orders. A fixed price contract and the PRICE could be changed with change orders.
19. Who has the cost risk in a fixed price (FP) contract? A. The team B. The buyer C. The seller D. Management
Dimension lumber
2"-4" thick
A good example specialized estimating software is WinEst. These estimating software use a spreadsheet layout for estimating and combine with a database. the database contains standard costs, productivity rates, labor rates, crews, and so on for each item.
2) Specialized Estimating Software
Answer C When you look at earned value, many of the terms have similar definitions. This could get you into trouble. Since the EAC means the estimate at completion, choice C is the best answer. Choice D is the definition of ETC, estimate to complete.
2. Estimate at completion (EAC) is a periodic evaluation of: A. The cost of work completed B. The value of work performed C. The anticipated total cost at project completion D. What it will cost to finish the job
Answer A It can be confusing to differentiate earned value terms from each other. The definition presented here is for EV or earned value, so choice A is the best choice.
20. Which of the following represents the estimated value of the work actually accomplished? A. Earned value (EV) B. Planned value (PV) C. Actual cost (AC) D. Cost variance (CV)
Answer B Every item in choice B accurately describes apart of the cost management plan. Notice how one word in each of the other options makes the entire choice incorrect. Choice A refers to duration estimates, which are created during the time management process, choice C includes measuring team performance, apart of human resource management, and choice D includes risk.
21. Which of the following are ALL items included in the cost management plan? A. The level of accuracy needed for estimates, rules for measuring cost performance, specifications for how duration estimates should be stated B. Specifications for how estimates should be stated, rules for measuring cost performance, the level of accuracy needed for estimates C. Rules for measuring team performance, the level of accuracy needed for estimates, specifications for how estimates should be stated D. Specifications for how estimates should be stated, the level of risk needed for estimates, rules for measuring cost performance
Answer A Accuracy is always important, but since the project charter has just been received, the project has not yet been planned. Therefore, although some of the choices are not blatantly wrong, it is best to estimate in a range.
22. Your project has a medium amount of risk and is not very well defined. The sponsor hands you a project charter and asks you to confirm that the project can be completed within the project cost budget. What is the BEST method to handle this? A. Build the estimate in the form of a range of possible results B. Ask the team members to help estimate the cost based on the project charter C. Based on the information you have, calculate a parametric estimate D. Provide an analogous estimate based on past history.
Answer D Choice A is an inappropriate action. Choice B is an incorrect statement. Choice C describes management reserves. During the risk management process, you determine appropriate cost contingency reserves for risk events. The sum of these reserves should be added to the total project estimate to cover the cost of risk events happening.
23. The cost contingency reserve should be: A. Hidden to prevent management from disallowing the reserve B. Added to each activity to provide the customer with a shorter critical path C. Maintained by management to cover cost overruns D. Added to the base costs of the project to account for risks
Answer C This is a professional and social responsibility/procurement/cost question. The situation described involves a claim. The best thing to do would be to get supporting information to find out what happened and take corrective action for the future. After choice C and negotiation, choice A would most likely occur. Choice D is unethical. Choice B is a meeting with YOUR management and should not occur until you have all the information.
24. The seller tells you that your activities have resulted in an increase in their costs. You should: A. Recommend a change to the project costs B. Have a meeting with management to find out what to do C. Ask the seller for supporting information D. Deny any wrongdoing
Answer A Look for the choice that would have the least negative impact in this situation. You would not need to meet with the sponsor to do choice B. Choices C and D always have negative effects. The choice with the least negative impact is Choice A.
25. Your cost forecast shows that you will have a cost overrun at the end of the project. Which of the following should you do? A. Eliminate risks in estimates and reestimate B. Meet with the sponsor to find out what work can be done sooner C. Cut quality D. Decrease scope
Answer D Procedures for the rental and purchase of supplies and equipment are found in the organizational policies, part of organizational process assets.
26. A new store development project requires the purchase of various equipment, machinery, and furniture. The department responsible for the development recently centralized its external purchasing process and standardized its new order system. In which document can these new procedures be found? A. Project scope statement B. WBS C. Staffing management plan D. Organizational policies
Answer A This is a tricky question. In order to pick the best answer, you need to realize that analogous estimating is a form of expert judgment. Notice choice C, "determnine why;" sounds like a good idea, but look at the rest of the senten ce. Analogous estimates are not accurate. Reading every word of this choice helps eliminate it.
27. Early in the life of your project, you are having a discussion with the sponsor about what estimating techniques should be used. You want a form of expert judgment, but the sponsor argues for analogous estimating. It would be BEST to: A. Agree to analogous estimating, as it is a form of expert judgment B. Suggest life cyde costing as a compromise C. Determine why the sponsor wants such an accurate estimate D. Try to convince the sponsor to allow expert judgment because it is typically more accurate
Answer B The overall project budget (choice A) may be included in the project charter but not the detailed costs. Even small projects (choice C) should have a budget and schedule. It is not impossible to create a project budget before the project management plan is created (choice D). It is just not wise, as the budget will not be accurate.
28. You have just completed the initiating processes of a small project and are moving into the planning processes when a project stakeholder asks you for the projects budget and cost baseline. What should you tell her? A. The project budget can be found in the project's charter, which has just been completed B. The project budget and baseline will not be finalized and accepted until the planning processes are completed C. The project management plan will not contain the project's budget and baseline; this is a small project D. It is impossible to complete an estimate before the project management plan is created
Answer C Choice A is too general. The estimates are already created in this example, so the answer is not choice B. The answer is not D, Control Costs, because the baseline has not yet been created. The correct answer is choice C.
29. The project manager is allocating overall cost estimates to individual activities to establish a baseline for measuring project performance. What process is this? A. Cost Management B. Estimate Costs C. Determine Budget D. Control Costs
Takeoff Software is software that allows the user to determine the estimate quantities from electronics set of drawing. (it determines length, width, area, and volume of different component in a building.)
3) Takeoff Software
Answer D CV = EV - AC
3. If earned value (EV) = 350, actual cost (AC) = 400, planned value (PV) = 325, what is cost variance (CV)? A. 350 B. -75 C. 400 D. -50
Answer D Recommending corrective actions (choice B) and possible updates to the cost baseline(choice C) result from the activity described; they are not concurrent with it. Monitoring costs are part of change control, but not part of creating the change control system (choice A).
30. Monitoring cost expended to date in order to detect variances from the plan occurs during: A. The creation of the cost change management plan B. Recommending corrective actions C. Updating the cost baseline D. Product performance reviews
Answer D The exam will ask you what the tools of project management cantain in order to test whether you really understand them. This question is almost impossible to guess correctly.
31. A cost management plan contains a description of: A. The project costs B. How resources are allocated C. The budgets and how they were calculated D. The WBS level at which earned value will be calculated
Answer D To answer this question, you must look for a choice that would take longer and cost more. If you picked choice A, reread it. It says scope was changed, not necessarily added to. If the change was to reduce the scope, it might also have reduced cost. Though it would take time to handle the event described in choice B, the impacted activity might not be on the critical path and thus might not affect time. Choice C would definitely add cost, but not necessarily time. Only choice D would negatively affect both time and cast.
32. A manufacturing project has a schedule performance index (SPI) of 0.89 and a cost performance index (CPI) of 0.91. Generally, what is the BEST explanation for why this occurred? A. The scope was changed B. A supplier went out of business and a new one needed to be found C. Additional equipment needed to be purchased D. A critical path activity took longer and needed more labor hours to complete
Answer C Actual costs are used to measure CPI, and there is no reason to use SPI in this situation, so choices A and B are not correct. Using past history (choice D) is another way of saying "analogous," The best way to estimate is bottom-up (choice C). Such estimating would have improved the overall quality of the estimate.
33. Although the stakeholders thought there was enough money in the budget, halfway through the project the cost performance index (CPI) is 0.7. To determine the root cause, several stakeholders audit the project and discover the project cost budget was estimated analogously. Although the activity estimates add up to the project estimate, the stakeholders think something was missing in how the estimate was campleted. Which of the following describes what was missing? A. Estimated costs should be used to measure CPI B. SPI should be used, not CPI C. Bottom-up estimating should have been used D. Past history was not taken into account
Answer A Earned value analysis is a great reporting tool. With it, you can show where you stand on budget and schedule as well as provide forecasts for the rest of the project.
34. Earned value analysis is an example of: A. Performance reporting B. Planning control C. Ishikawa diagrams D. Integrating the project components into a whole
Answer A This is one of those questions that combines topics from various knowledge areas. Did you fall into the trap of calculating the float for Z? The amount of float for one activity and the number of stakeholders does not tell you anything in this case, so choices Band D cannot be the best answers. The CPI is greater than one and the SPI is less than one. Therefore, the thing to be most worried about would be schedule.
35. You are about to take over a project from another project manager and find out the following information about the project. Activity Z has an early start (ES) of day 15 and a late start (LS) of day 20. Activity Z is a difficult activity. The cost performance index (CPI) is 1.1. The schedule performance index (SPI) is 0.8. There are 11 stakeholders on the project. Based on this information, which of the following would you be the MOST concerned about? A. Schedule B. Float C. Cost D. The number of available resources
Answer A Cost accounts are included in the project cost estimate, and the contingency reserve is added to that to come up with the cost baseline. Thereafter the management reserve is added to come up with the cost budget. Therefore, only choice A is correct.
36. The difference between the cost baseline and the cost budget can be BEST described as: A. The management reserve B. The contingency reserve C. The project cost estimate D. The cost account
Answer C This question is full of choices that are not correct project management actions. If you picked the wrong answer, look again at the choices and try to determine what you are missing. Whatever it is, it will show up more than once on the real exam! To answer the question, you must first realize that it is never appropriate for a project manager to just cut estimates across the board (choice B). The project manager should have created an estimate with realistic work package estimates that do not include padding. Then, if costs must be decreased, the project manager can look to cut quality, decrease risk, cut scape, or use cheaper resources (and at the same time closely monitor the impact of changes on the project schedule). One of the worst things a project manager can do is to start a project while knowing that the time or cost for the project is unrealistic. Therefore, choice A cannot be best. Notice that choice D suggests adding resources. That would cost more. Choice C involves evaluating, looking for alternatives, and then going to the sponsor to tell him the impact of the cost cutting.
37. You provide a project cost estimate for the project to the project sponsor. He is unhappy with the estimate, because he thinks the price should be lower. He asks you to cut 15 percent off the project estimate. What should you do? A. Start the project and constantly look for cost savings B. Tell all the team members to cut 15 percent from their estimates C. Inform the sponsor of the activities to be cut D. Add additional resources with low hourly rates
Answer C Choice A is a correct statement but it is not the definition of cost risk. Choice B refers to the overall cost risk on the project, and assumes that the risk is too great to do the project. The opposite of choice D is correct.
38. Cost risk means: A. There are risks that will cost the project money B. The project is too risky from a cost aspect C. There is a risk that project costs could go higher than planned D. There is a risk that the cost of the project will be lower than planned
Answer C Choice C describes costs that are directly attributable to the project or that vary with the amount of work accomplished.
39. A project manager needs to analyze the project costs to find ways to decrease costs. It would be BEST if the project manager looks at: A. Variable costs and fixed costs B. Fixed costs and indirect costs C. Direct costs and variable costs D. Indirect costs and direct costs
Answer D Presenting anything besides your original estimate (allocating more to the budget) is inaccurate and calls into question your competence and integrity as a project manager. The customer should list potential changes and risks to your estimate. If the costs and risks are justified, you can increase the budget.
4. The customer responsible for overseeing your project asks you to provide a written cost estimate that is 30 percent higher than your estimate of the project's cost. He explains that the budgeting process requires managers to estimate pessimistically to ensure enough money is allocated for projects. What is the BEST way to handle this? A. Add the 30 percent as a lump sum contingency fund to handle project risks B. Add the 30 percent to your cost estimate by spreading it evenly across all project activities C. Create one cost baseline for budget allocation and a second one for the actual project management plan D. Ask for information on risks that would cause your estimate to be too low
Answer: Really asking for ETC. ETC = EAC - AC. We have AC. Can we get EAC? EAC = BAC/CPI. Now we have everything we need. ETC = EAC - AC = BAC/CPI -AC = $ 80,000/0.95 - $25,000 = $59,210 (A)
40. You are the project manager for a railroad construction project. Your Sponsor has asked you for a forecast for the cost of project completion. The project has a total budget of $80,000 abd CPI of .95 . The project has spent $25,000 of its budget so far. How much more money do you plan to spend on the project? A. $59,210 B. $80,000 C $84,210 D $109,210
Answer: Let's look at the schedule. Should be 45% complete, we are 40% complete. SPI = EV/PV = 40% / 45% = 0.89 < 1. We are behind schedule. Now to budget. CPI = EV/AC = (40% x $450,000) / $165,000 = 1.09. We are within budget.
41. You are managing a project with a total budget of $450,000. According to the schedule, your team should have completed 45% of the work by now. But at the latest status meeting, the team only reported that 40% of the work has actually been completed. The team has spent $165,000 so far on the project. How would you best describe this project? A. The project is ahead of schedule and within its budget. B. The project is behind schedule and within its budget. C. The project is ahead of schedule and over its budget. D. The project is behind schedule and over its budget.
Answer: Just answer the question. A ROM estimate is defined as -50% to +100%. The rest is unnecessary information.
42. You are managing a construction project that is currently being initiated. You met with the sponsors and several important stakeholders, and have started to work on the preliminary scope statement. You've documented several key assumptions that have been made, and identified project constraints and initial risks. Before you can finish the preliminary scope statement, you must make a rough order of magnitude estimate of both time and cost so that the sponsor can allocate the final budget. What is the range of a rough order of magnitude (ROM) estimate? A. -10% to +10% B. -50% to +50% C. -50% to +100% D. -100% to +200%
Answer: The question is asking for the difference between planned and actual spending. This is Cost Variance, so CV.
43. You are managing a construction project to install new door frames in an office building. You planned on spending $12,500 on the project, but your costs are higher than expected, and now you're afraid that your project is spending too much money. What number tells you the difference between the amount of money you planned on spending and what you've actually spent so far on the project? A. AC B. SV C. CV D. VAC
Answer: SPI = EV/PV = 15000/12000 = 1.25 > 1 so we're ahead of schedule. CPI = EV/AC = 15000/11000 = 1.36 > 1 ($1.36 in value for every dollar spend) so we're within our budget. (A)
44. You are managing a project with an EV of $15,000, PV of $12,000, and AC of $11,000. How would you BEST describe this project? A. The project is ahead of schedule and within its budget. B. The project is behind schedule and within its budget. C. The project is ahead of schedule and over its budget. D. The project is behind schedule and over is budget.
Answer: The question is asking how much MORE money will be spent to complete the project. This is the Estimate to Completion, or ETC, which is given to you. $45,600 (A)
45. You are managing a project with AC = $25,100 , ETC = $45,600 , VAC = -$2,600, BAC = $90,000, and EAC = $92,100. Your sponsor asks you to forecast how much money you expect to spend on the remainder of the project. Which is the BEST estimate to use for this forecast? A. $45,600 B. $87,400 C. $90,000 D. $92,100
Answer: SPI is greater than 1, you are ahead of schedule. CPI is less than 1, you are over budget. (C)
46. You are managing a project with a schedule performance index (SPI) of 1.07 and a cost performance index (CPI) of .94. How would you BEST describe this project? A. The project is ahead of scheule and within its budget. B. The project is behind schedule and within its budget. C. The project is ahead of schedule and over its budget. D. The project is behind schedule and over its budget.
Answer: EV, AC, SV, CV, SPI, AND CPI are all measures of PAST performance. ETC and VAC predict future values. Forecasting is future. (C)
47. You are the project manager for a railroad construction project. Your sponsor has asked you for a forecast for the cost of project completion. Which of the following is the BEST metric to use for forecasting? A. EV and AC B. SV and CV C. ETC and VAC D. SPI and CPI
Answer: The important information in this question are the NPV values. The given times and BCR are unnecessary information. Choose the greatest NPV. (B)
48. You have been asked to select between three projects. Project A has a net present value of $54,750 and will take six months to complete. Project B has a net present value of $85,100 and will take two years to complete. Project C has a net present value or $15,000 and a benefit-cost ratio of 5:2. Which project should you choose? A. Project A B. Project B C. Project C D. There is not enough information to decide.
Answer: From the equations, we have CPI = EV/AC. Solving for AC, gives us AC = EV/CPI = 172,500/0.92 = $187,500 (C)
49. You've been hired by a large consulting firm to evaluate a software project for them. You have access to the CPI and EV for the project, but not the AC. The CPI is .92 and the EV is $172,500. How much money has actually been spent for the project? A. $158,700 B. $172,500 C. $187,500 D. There is not enough information to calculate the actual cost.
Answer C Analogous estimating is used most frequently during the planning processes, not the executing processes (choice B). You do not need to use historical costs (choice D) for an analogous estimate. Therefore, choice C is the correct answer.
5. Analogous estimating: A. Uses bottom-up estimating techniques B. Is used most frequently during the executing processes of the project C. Uses top-down estimating techniques D. Uses actual detailed historical costs
Answer B This question is asking, "When you finish estimating costs, what do you have?" Many people who do not realize that estimates should be in a range pick choice C. Choice B is more correctly part of the cost management plan and the change control system.
6. All of the following are outputs of the Estimate Costs process EXCEPT: A. An understanding of the cost risk in the work that has been estimated B. The prevention of inappropriate changes from being induded in the cost baseline C. An indication of the range of possible costs for the project D. Documentation of any assumptions made during the Estimate Costs process
Answer D Life cycle costing looks at operations and maintenance costs and balances them with the project costs to try to reduce the cost across the entire life of the project.
7. The main focus of life cycle costing is to: A. Estimate installation costs B. Estimate the cost of operations and maintenance C. Consider installation costs when planning the project costs D. Consider operations and maintenance costs in making project decisions
Answer B Asking percent complete (choice A) is not a best practice since it is usually a guess. Often the easiest work is done first on a project, throwing off any percentage calculations of work remaining. It may be a good thing to use the 50/50 rule, as in choice C. However, the 50/50 rule is not necessarily induded in the progress report, and the second part of the sentence is incorrect. The life cyde cost cannot be lower than the project cost, as the life cyde cost indudes the project cost. Choice D is often done by inexperienced project managers who know of nothing else. Not only does it provide little information, but also it cannot be used to predict the future. Choice B is the best answer since it looks at the past and uses this information to estimate future costs.
8. Cost performance measurement is BEST done through which of the following? A. Asking for a percent complete from each team member and reporting that in the monthly progress report B. Calculating earned value and using the indexes and other calculations to report past performance and forecast future performance C. Using the 50/50 rule and making sure the life cyde cost is less than the project cost D. Focusing on the amount expended last month and what will be expended the following month
Answer D The CPI is less than one, so the situation is bad. Choice D is the best answer.
9. A cost performance index (CPI) of 0.89 means: A. At this time, we expect the total project to cost 89 percent more than planned B. When the project is completed we will have spent 89 percent more than planned C. The project is only progressing at 89 percent of the rate planned D. The project is only getting 89 cents out of every dollar invested
change order
A _________ _________ are drawings or information that modifies the original contract documents after the bid date.
subcontractor
A _________ bids only that part of the work that is of interest to him and he submits his bid to the general contractor.
...
A common error made by GCs in their dealings with subcontractors is to hand them a single technical specifications section relating to their trade, without copies of either the General Requirements or the General and Supplementary General Conditions of the Contract.
Instruction to bidders
A document stating the procedures to be followed by bidders.
True
A good database of past project experiences is essential to preparing a quick and accurate estimate.
Punch List
A list prepared by the architect or engineer of the contractor's uncompleted work or work to be corrected.
True
A lump-sum bid is also known as a stipulated sum bid
False
A number 8 rebar is 3/4" in diametere
retention
A percentage of the payment from the owner to the contractor withheld is called:
True
A subcontractor bid of $5.25/lineal foot for concrete curbing would be an example of a unit price bid
Retainage
A sum withheld from each payment to the contractor in accordance with the terms of the owner-contractor agreement.
Bid Bond
A surety bond guaranteeing that a bidder will sign a contract, if offered, in accordance with their proposal.
Change Order
A work order, usually prepared by the architect and signed by the owner or the owner's agent, authorizing a change in the scope of the work and a change in the cost of the project.
the acceptance and the final sets at a time for the final payment to the contractor. (final inspection, certificate of completion, acceptance of work, lien releases)
Acceptance and Final Payment
Estimate Cost Outputs
Activity cost estimates Basis of estimates Update project documents
The addenda statement is the drawing or information that modifies the basic contract documents after they have been issued to the bidder, but prior to the taking of bids. (clarification, correction, or change)
Addenda
False
Addenda are sent out after the bids have been received on the original set of contract documents.
Borrow
Addition earth material needed because there is a shortage on the site
summary
After all the workup sheets have been completed and the estimator is ready to finalize his bid, he puts all the information on a ______ sheet.
estimate
An __________ is a forecast guess of the probable costs of any given project
Liquidated Damages
An agreed-to sum chargeable against the contractor as reimbursement for damages suffered by the owner because of contractor's failure to fulfill contractual obligations
Omissions
An errors and _______ sheet should be part of your estimate notebook.
False
An estimator keeps a monthly notebook with all jobs bidding that month being documented in the same volume.
Invitation to bid
An invitation to a selected list of contractors furnishing information on the submission of bids on a subject.
Estimate Cost Tools and Techniques
Analogous estimating Bottom-up estimating Expert judgment Parametric estimating Reserve analysis Three-point estimates Top-down estimating Vendor data analysis Project management estimating software Cost of quality Group decision making techniques
Overhead
Any cost not identified wight the production or sale of specific goods or services -any project cost which cannot be included in material, labor, subcontractors, or equipment costs -costs that are not incurred as direct result of a particular construction activity with a particular construction project
Statistical cost estimation
Approach to dealing with both random and unusual events is to use several periods of operation or several locations as the basis for estimating cost relations.
Allowances
Architect-Engineer or owner designates special amount for specific item of work (i.e. finish hardware, face brick, light fixtures) can act as type of contingency fund
Deposits
Architect-Engineers require a deposit for each set of documents as a guarantee for its safe return is usually refundable rangers from $50 to several hundred dollars
54 sf
Area covered by 1 cy of concrete at 6" thick
work volume
As company _____ ______ increases, main office overhead percentage decreases
The estimator uses more detailed information such as the bay size, square feet of partition wall, number of plumbing fixtures, or square feet of carpet.
Assemblies Estimate:
Bid by group of component
Assembly Estimate
H/3 (A+B+(SQROOT A*B)
Banked cubic feet
Hybrid: Phase Estimating
Begins with a top-down estimate for the project and then refines estimates for phases of the project as it is implemented
Bid bond ensures that if a contractor is awarded the bid within the time specified, the contractor will enter into the contract and provide all other specified bonds.
Bid Bond
A bid form is a standard form that all contractors use to submit their bids.
Bid Form
False
Bid bonds are typically required to be 100% of the contract amount.
Productivity
Biggest affect on the cost of labor
N=P (x) [(TxW)/12] (x) L
Board foot measurement
False
Bond patterns in masonry enhance the looks of a wall but do no concern the estimator
Builder's risk fire insurance protects projects under construction against direct lost to fire and lighting
Builder's Risk Fire Insurance
construction specifications institute
CSI
VC Total
Changes in the same direction and in direction proportion to changes in activity level
Joist
Closely spaced beams supporting a floor or ceiling. They may be wood, steel, or concrete.
Vapor Barrier
Comes in rolls of various widths
Competitive Bidding is a bid that is based on the price or best value.
Competitive Bidding
Mortar joints
Concave, flush, raked
False
Concrete is usually estimated and sold by the cubic foot
#4 @ 12" O.C. each way
Concrete reinforcing steel terminology
Considerations with labor
Consider: climate, working conditions, skill level of crew
VC per unit
Constant ( no matter what happens to changes in activity level)
FC total
Constant no matter what happens to changes in activity level
Truly, its both, it will never be a science. Estimators rely on their, intuition, past experience, judgment and sometimes guesses.
Construction estimating is more an art than a science
True
Contour lines connect points of equal elevation
Contract sum is the amount of the accepted bid or negotiated amount. (may be adjusted by alternates)
Contract Sum
Paid for actual construction cost plus fees (fixed fee, sliding scale fee, fixed fee with bonus and penalty, fixed fee with guaranty maximum cost).
Cost Plus Fee
Tools and Techniques of Determine Budget
Cost aggregation Reserve analysis Expert judgment Historical relationships Funding limit reconciliations
Variable rate
Cost associated with highest activity level - cost associated with lowest activity level / highest activity level - lowest activity level
Engineering method
Cost estimate based on measurement and pricing of the work involved in a task. Example, the size of the center which can be easily represented by the time it takes employees to provide repair service.
Outputs of Determine Budget
Cost performance baseline Project's funding requirements Project documentation
Fixed cost
Costs that are unchanged as volume changes within the relevant range. total fixed cost per unit changes as cost driver activity fluctuate.
Variable cost
Costs that change in direct proportion with a change in volume within the relevant range. Variable cost per unit will stay the same.
Kept on the site over a longer period of time, throughout almost the entire construction phase. Cranes; Air compressors; Floodlights and light towers Forklifts; Pumps
Describe and provide examples of specific use equipment and general use equipment.
Units are assignable to jobs and are not shared by other subcontractors. Tractors; Scrapers; Front shovels; Hoes; Loaders and backhoe loaders; Hauling units; Compactors
Describe and provide examples of specific use equipment and general use equipment.
1. Construction Materials 2. Erection Labor 3. Fixed Equipment Costs
Describe factors affecting the accuracy of detail cost estimating.
The CSI format is a numbering system which divides the major areas involved in the construction project into 50 divisions (0 to 49). The format allows the contractor to develop a tracking system for all types of information.
Describe the CSI MasterFormat and how it is used.
Skilled labor and material portions
Describe the composition of the Building Cost Index (BCI).
Common labor and material portions
Describe the composition of the Construction Cost Index (CCI).
Invitation to bid
Describes location, bid date and time, bond requirements, start and completion dates
Detail estimate determines the quantity and the cost of everything required for a project. Including: Material Labor Equipment Insurance Bonds Overhead eTc....
Detail Estimate ( Most Accurate)
Concrete
Division 03
Masonry
Division 04
Metals
Division 05
Wood, plastics, and composites
Division 06
Thermal and moisture protection
Division 07
Openings
Division 08
Finishes
Division 09
Plumbing
Division 22
HVAC
Division 23
Electrical
Division 26
As-built drawings
Drawings made during the progress of construction, or subsequent thereto, illustrating how various elements of the project were actually installed.
1/4-3/8-1/2-5/8
Drywall thickness
True
Equipment costs are generally broken down into the categories of ownership and operating costs
True
Estimating labor requires determining the number of work hours to do a specific task and then applying the wage rate.
False
Existing contour lines are shown with solid lines on site plans
A way to gather reliable information Create intelligent model Run analysis on model Resent the physical and function characteristic of model Predict performance of the project
Explain "BIM"?
....
Explain AIA?
Contingency is a sum of money or a percentage (standard 10%) must be added to the contract bids for items overlooked or left out during the estimating process.
Explain Contingencies?
too much to write....
Explain bid process from the invitation to bid to the issuance final contractor agreement (contract)?
Lump-Sum Estimate Unit Price Estimate
Explain firm price contracting estimates.
1) Computerized estimating can reduce calculation errors, which gives the estimator more accurate cost for the project 2)Computerized estimating increase the speed at which the estimate is prepared by performing the math that the estimator would have to do. 3) Many computerized estimating packages allow the estimator to track where the quantities came from. 4) Computerized estimating allows estimator to quickly change a price and productivity rate and get an instantaneous change in project's cost.
Explain four (4) benefits that computerized estimating offers?
The project manual is a document that accompanies the drawing and includes the information on how to bid the project, the contractual obligation of the successful contractor, and the specification of the material used in the construction.
Explain project manual?
Single contract: owner contract with a prime contractor and the contractor hired the subcontractors. Separate contract: the owner hired all the contractors separately (general contractor, electrical, plumbing, heating, etc).
Explain the difference between single contract and separate contract?
The first danger is to turn the thinking over the computer. Computers are very good at repeating mundane, such as mathematical equation. but sometimes if the job is different than most typical condition the contractor must make the appropriate adjustment. the second danger is to use a software for a project that was not designed to estimate.
Explain two (2) dangers that 'Computerized Estimating' can cause?
1) Home office overhead costs (indirect overhead costs) are costs that not readily chargeable to one particular project. these costs are fixed expenses that must be paid by the contractor and are the costs of staying in business. (i.e. office, salaries and wages, miscellaneous, depreciation) 2) Job overhead (general conditions, direct overhead) costs are are costs that can be readily charged a specific project but to a specific item of work on that project. Most of these costs are in function of the duration of the project and varies base on the size of the project. (i.e. Salaries, temporary office, temporary barricade, cleanup, photography, drinking water).
Explain two (2) types of overhead cost and list five (5) examples of each.
It is a document that that shows all the development of the project. It improves the probability of getting the work, facilitating the actual work in the field, and completing the work within budget.
Explain what is meant by "organization" during the estimate development process?
Scheduling is very important because it affect the cost. most of the overhead cost are based on the duration of the project. the longer it takes a project to complete the more the overhead will be.
Explain why project scheduling affect the cost?
Scheduling overtime for more than several weeks can result in huge productivity losses.
Explain why using overtime is not recommended for most construction projects.
3
Feet in a yard
Finding and bidding the type of work that's appropriate for your company, Making accurate cost estimates, Using pricing strategies that reduces your risk of loss, Anticipating the bids of your competition, Tracking overhead so you know the actual cost of doing business
Five basic skills everyone should master
Overhead indirect
General costs that represent the cost of operating a construction business are included in the category of ______ ________ costs.
Scatter graphs and high-low estimates
Graph that plots costs against activity levels.
Surety bonds can only be obtained through companies who specialize in issuing surety bonds. The contractor will have to request the surety company to provide the bonds.
How are the various surety bonds that may be required on a specific project obtained?
Both extreme hot and cold will tend to slow down the pace of work.
How do climatic conditions influence the amount of work actually completed in an hour?
With insurance an insurance company assumes the financial liability for a specified loss. The surety guarantees the performance of a contractor. The surety company will try to recover any losses from the contractor.
How does insurance differ from a surety bond?
Template Methods
If the project is similar to past projects, then the costs from past projects can be used as a starting point for the new project - enables firm to develop a potential schedule, estimate costs and a potential budget
private negotiated
In an ______________ bid the owner, architect, and contractor get together and arrive at a mutually agreed upon place.
Instructions to bidders provide bidders with procedures that must follow to submit a complete bid. it contains dates, time, location bid deadline, and so on.
Instructions to Bidders
Invitation to bid invites potential contractors to bid on the project and provides a brief summary of project.
Invitation Bid
Why is it critical to accurately calculate the centerline of a perimeter foundation to a building?
It is critical to accurately calculate because the trench and wall will share the identical centerline value
Liens
Legal claims against an owner for amounts due those engaged in or supplying materials for the construction of the building.
Board
Less than 2" thick
Relevant range of activity
Limits within which a cost estimate may be valid.
Accurate and precise bidding capabilities, staying on schedule, safety, quality
List four commonly used measures of project success in the construction industry
External factors: market conditions and climatic conditions; beyond the control of the contractors. Internal factors: work conditions and management conditions
List the factors affecting labor productivity
1) Microsoft Project 2) Suretrack 3) Primavera 4) Primavera P6 5) Primavera Contractor
List three (3) examples of scheduling computer software that are useful tools in sequencing the construction process?
Taxes, insurance, storage
List three FIXED ownership costs for a piece of equipment
General conditions, adenna, specifications, historical data, pricing guide, contract
List three of the six contract documents that must be thoroughly reviewed when developing a cost estimate for a project
quantity takeoff, bid invitation, bid submittal
List three of the six steps in the estimating and bidding process
Wide flange beam, american standard beam, angles
List three structural steel shapes used in building construction
Trade, location, EMR
List three things that affect the Workers Compensation rate that must be paid for an employee.
Single price for the entire job, may include alternates
Lump-Sum (stipulate-sum, fixed price)
Types of Estimates
Lump-Sum Estimates Unit-Price Estimates Approximate Estimates
High-low estimation
Method to estimate cots based on two cost observations, usually at the highest and lowest activity levels.
5280'
Mile in feet
Model Estimating uses computer software to prepare an estimate based on the number of question answered by the estimator. Similar to assembly estimate but required less input from estimator.
Model Estimating
Addenda
Modifies the contract documents after they have been released and prior to the bid
LL
Moisture content when soil begins to flow
1. Review scope 2. Quantity takeoff 3. Price materials 4. Price labor 5. Price equipment 6. Obtain specialty contractor's bid 7. Obtain supplier's bid 8. Calculate taxes, bonds, insurance, and overhead 9. Contingency 10. Profit
Name 10 step process to bid
1) Bid bond 2) Performance bond 3) Payment bond (Labor and Material Bond)
Name and Explain three (3) types of bonds
1)Scope of work 2) Time of completion 3) Contract sum 4) Progress payments 5) Retained percentage 6) Schedule values 7) Work in place and stored materials 8) Acceptance and final payment
Name and explain eight (8) provisions that are included in the agreement?
1) Spreadsheets 2) Specialized Estimating software 3) Takeoff software
Name and explain three (3) computers estimating software that are used today?
1) Lump sum 2) Unit price 3) Cost plus fee
Name and explain three (3) types of agreements?
1) Patience 2) Organize 3) Basic math geometry skills 4) Software literate 4) Meet deadlines
Name five (5) abilities that an estimator must have?
Division 1 - General Requirement Division 2 - Site Construction Division 3 - Concrete Division 4 - Masonery (Ex. Concrete block) Division 5 - Metals Division 6 - Wood and Plastics Division 7 - Thermal and Moisture Protection Division 8 - Doors and Windows Division 9 - Finishes Division 10 - Specialities Division 11 - Equipement Division 12 - Furnishings Division 13 - Special Construction Division 14 - Conveying System Division 15 - Mechanical (Ex. Plumbing and HVAC) Devision 16 - Electrical
Name the 1995 (pre-2004)master format divisions
Order of Magnitude Estimate, Square foot and cubic foot estimate, Assemblies(Systems estimate), Detailed Estimate
Name the types of Estimates
1) Publicly advertise (newspaper) 2) Internet 3) Magazines
Name three (3) sources of bidding?
Renting, Leasing, Buying
Name three common methods of procuring equipment.
Master Format and Uniformat
Name two systems that establish standards for the building design/construction estimating process.
Negotiating Bidding is an agreement between the contractor and the owner upon price, terms and conditions, and contractual relationship.
Negotiating Bidding
Stud grade
No. 2 Grade
Utility grade
No. 3 Grade
Economy grade
No. 4 Grade
Advertisement for Bids on Public Projects are referred to as...
Notice to Bidders or an Invitation to Bid ads describe nature, extent, and location of the work and the authority under which is originates ads also describe the time, manner, and place in which bids are to be received
True
On certain projects the owner may accept proposals only from contractors who are invited to bid.
material-Equipment
One of the three main direct cost components of self performed work that the estimator must consider with his estimate is labor, the remaining two are ___________ and _________.
Course
One row of masonry units
Civil, industrial, commercial
One segment of the construction industry is called residential. List the other three segments of the industry
False
Only the initial equipment purchase price is used when calculating the cost per unit of production for any piece of equipment
a. Tires and other wear items b. Fuel, lubricants, and filters c. Repair reserves d. All of the above
Operation costs include:
A gross unit such as the number of hospital beds is used.
Order of Magnitude Estimate:
Parametric procedures
Parameter techniques such as cost per square foot be applied to specific tasks???
Parametric Estimate base upon a statistical relation between building component and the cost of the building. this method is similar to Square-Foot Estimate except it involve more complex equations.
Parametric Estimate
A payment bond guarantees the payment of the contractor's bill for labor and materials used or supplied on the project.
Payment Bond (Labor and Material Bond)
Yes, because the specification must be written concurrently with the working drawing.
Per Residential Specification DJMUF1278, does the drawing take procedure over the specification? Explain?
A performance bond guarantees the owner that the contractor will perform all work in accordance with the contractor documents and that the owner will receive the project built in substantial agreement with the documents. It protects the owner against default on the contractor up to the amount of the bond penalty.
Performance Bond
Availability of Plans and Specification
Plans and Specification documents are limited For takeoff and pricing purposes, subcontractors and material dealers can obtain their own bidding documents from the architect-engineer or owner, or they can use the facilities of local plan services Contractor often time makes own copies in their entirety
Overhead cost
Preliminary work schedules are used to help the estimator to estimate the length of the project to help determine
Notice of Private Projects
Private owners may proceed in any manner they choose to select a contractor Public advertisement is not commonly used Negotiated contracts are most commonly used Also use Invitational Bidding: Owner selects a few prime contractors to bid
Payments receive as work is completed.
Progress Payments
Project comparison estimates are prepared by comparing the cost of the proposed project to a similar complete project.
Project Comparison Estimates
Estimate Cost Inputs
Project Scope Baseline Project Schedule Human Resource Plan Risk Register Enterprise Environmental Factors Organizational Process Assets Cost management plan
Property insurance covers real property (real estate) owned by the contractor, such as office, buildings, shops, and warehouse. protect the contractor against loss of the structure and some liability arising from injuries that occur on the property.
Property Insurance
Bid
Proposal prepared by prospective contractor specifying the charges to be made for doing the work in accordance with the contract documents.
False
Reinforcing bars are generally priced out by the piece on larger jobs
Advantages and disadvantages of account analysis
Relies heavily on personal judgement. It can be an advantage or disadvantage, depending on the bias of the person making the estimate.
A percent of the amount retained by the owner as a protection to ensure that the work is completed. (standard 10%)
Retained Percentage
Brick pattern
Running, common, stack
Price for specific items
Schedule Values
The agreement should specify all of the work that the contractor needs to complete to fulfill their obligations to the owner.
Scope of Work
Waste
Soil that is not needed for onsite backfill or fill
Fill
Soil that is used to raise a grade
Square-Foot Estimate is base on the average square foot of work. may adjust for: Building height Building perimeter Etc...
Square-Foot Estimate (quick estimate)
Addenda
Statements or drawings that modify the basic contract documents after the latter have been issued to the bidders, but prior to the taking of bids.
False
T or F: There is no value in having the individuals who are going to supervise the work assist in preparing the cost estimate.
Total cost formula
TC = TFC + TVC Y =MX + B M= VARIABLE X= NUMBER OF VOLUME B=FIXED COST
high low method formula
TC= FC + VC (x)
16-50
The 1995 version of the CSI format has _____ divisions and the 2004 version has ______ divisions.
True
The General Conditions are used to spell out the rights and responsibilities of all the parties involved in the contract.
Erection
The assembly of components to form the completed portion of a job.
True
The equipment used on construction projects can be divided into three categories: Owned, leased, and rented.
False
The estimator that performs the quantity takeoff is always responsible for assigning the degree of risk involved in pricing the bid
False
The evaluation of time and resources required to construct a project would not be a part of a detailed construction estimate.
False
The field superintendents salary would be included in the home office overhead costs category
False
The information provided in the General Conditions and Supplementary General Conditions does not influence the project cost.
False
The initial equipment costs and its maintenance costs are of little concern to the estimator
True
The location where material can be stored in relationship to the construction project affects productivity.
True
The most reliable productivity rates come from historical data
Account analysis
The most used practice in corporate america. Review of each cost account used to record the costs that are of interest, and the identification of each fixed or variable, depending on the relation between the cost and some activity. The identification depends on the accountant's judgment and experience.
cost plus fee
The percentage fee, fixed fee, and sliding scale fee are all types of a __________ ________ ________ agreement.
conceptual
The three types of estimates produced are _________, preliminary, and detailed.
False
The volume of concrete is the only take off process needed to complete the estimating process for a building foundation and floor slab
# of hours (x) labor rate
Total labor costs (hourly)=
# of units (x) labor costs per unit
Total labor costs(unit)=
quantity (x) # of units per quantity (x) labor cost per man hr
Total labor costs=
False
Unlike concrete construction, masonry construction does not require reinforcing
Function Point Method
Used as number of: inputs; outputs; inquires; data; files and number of interfaces - usually used on the software industry
Phase Estimating
Used when an unusual amount of uncertainty surrounds a project and it is impractical to estimate times and costs for the entire project - a detailed estimate is developed for the immediate phase and a macro estimate is developed for remaining phases of the project - preferred by those working on projects where the final product is unknown and the uncertainty is VERY large
Internal Factor, External Factor, Project Related-Factor
What are some of the factors a contractor considers when making a decision to bid?
1. The contractor can get the most suitable piece of equipment. 2. The equipment is most likely newer and in a better state of repair. 3. The rental company handles maintenance. 4. The contractor does not tie up their capital.
What are the advantages to a small contractor of renting equipment instead of owning?
Published cost standards seldom represent 100% of the project under consideration. The location factor ,The time factor
What are the difficulties encountered by the estimator during the preparation of a project's conceptual estimate?
Invitation to bid Instructions to bidders Bid form Owner-contractor agreement Addenda Working drawings
What are the items that contained in a contract document?
Direct Negotiation, Competitive Bidding
What are the two most common methods by which a contractor can acquire a construction contract?
The amount of work that can be done in an hour
What does the labor hour represent?
........
What is RS Mean Costwork?
A specialist contractor is a separated contractor hired by the general (prime) contractor to do a certain portion of the work.
What is a speciality contractor?
The loss in value of equipment that the contractor owns. The loss is a result of age, wear and tear, and obsolescence
What is depreciation?
Predicting the cost in advance based on a model (formal or informal, plans and specifications) of a project
What is estimating in construction?
The practice of withholding a percentage of the payment due to the contractor for the work performed and completed for that payment period. Retainage can affect the cash flow of the contractor and must be considered in the preparation of the bid.
What is retainage? Why should a contractor be concerned with a retainage clause in a contract?
The bid bond ensures that if a contractor is awarded the bid with the time specified, the contractor will enter into the contract and provide all other specified bonds. If the contractor fails to do so without justification, the bond shall be forfeited to the owner.
What is the bid bond and how does it protect the owner?
The maintenance bond guarantees the owner that the GC agrees to correct all defects of workmanship and materials for a specified period (one to three years) following occupancy by the owner.
What is the maintenance bond?
The payment bond (labor and material bond) guarantees the payment of all bills incurred by the contractor for labor and materials incurred or supplied on the project.
What is the payment bond?
The performance bond guarantees the owner that, within limits, the contractor will perform all work in accordance with the contract documents, and that the owner will receive the project built in substantial agreement with the documents.
What is the performance bond?
Generally, the advertisement describes the location, extent, and nature of the work. It will designate the authority under which the project originated. Concerning the bid, it will give the place where bidding documents are available and list the time, manner, and place where bids will be received. It will also list bond requirements and start and completion dates of work.
What types of information are provided in the Invitation to Bid?
The Labor Hour
What unit of time is used to measure labor?
Weight per foot, length of steel member
When estimating structural steel what are the two items needed to find the total weight of each member
List all known information, make a sketch of the problem, include units on all numbers, write out the equations used
When performing estimating computations one should:
Bid bond requirements are stated in the advertisement of Bidders. They are usually amplified in the specifications.
Where would information be found on whether a bid bond was required and, if so, its amount?
1. Better understanding of the work to be subcontracted, 2. Establishment of fair cost estimate for evaluating subcontractor's bid, 3. Checking of a subcontractor's scope of work, and 4. Determination of time duration that can be assigned to a subcontractor.
Why is it a good idea for the general contractor to perform quantity surveys on work that is to be subcontracted out?
A site visit is important especially before the pre-bid because it helps the contractor gather information on the project that it is going to bid on. ( site access, availability of utilities, site drainage, transportation facilities, any required protection banking facilities, etc..)
Why is site visit important?
Material, labor, and subcontractor pricing/quotes always be in writing because once they are written and signed, they cannot change the price to charge you more.
Why should material, labor, and subcontractor pricing/quotes always be in writing?
Worker compensation provides benefits for workers injured or killed on jobs (base upon location, type of work, company claim summary)
Worker Compensation
The actual plans from which the project is to be built.
Working Drawings
Contract Documents
Working drawings, specifications, general conditions, supplementary general conditions, the owner-contractor agreement, and all addenda (if issued).
Range estimating
Works best when the work package has significant uncertainty associated with the time or cost to complete
Direct costs
Would not have been incurred if the activity had not been performed labor-materials and installed equipment-production equipment-subcontracting costs
Cost Line Equation
Y = a + bx
Dependent variable
Y term or the left hand side of a regression equation
What each variable means
Y= total cost b- variable rate x= activity level bx= total variable cost a= total FC
True
Your companies historical data would be the best source of information when determining the unit cost of masonry construction for an estimate being prepared
office-field
______ overhead usually ranges from 4% to 13% of direct costs and _______ overhead usually ranges from 10% to 20% or more of direct costs
Proposal
a written offer, tendered by the contracting firm to the owner stipulates price for which the contractor agrees to perform the work described by the bidding documents contrains promise that bidder will enter into a contract with owner for the amount of the proposal
Approximate Estimates allow for more...
accurate unit costs and used as the design progresses toward finalization
Markup
added at close of estimating process an allowance of profit plus other items including general overhead and contingency generally 5% to 20% of job cost
Quantity Surveys
aka Takeoff detailed compilation of the quantity of each elementary item that is called for on the project is the only accurate and dependable procedure for compiling a detailed estimate Professional Quantity Surveyors: hired out to make quantity surveys and cost estimates
Cost Control
aligns to reductions in cost of a process to the application of various methods
Instruction to Bidders
all competitors must bid under exactly the same conditions for an identical package of work these instructions review the requirements that the owner has set up for the form and content of the bids and also prescribe certain procedures with which the bidding contractors are required to conform
Supplementary conditions
amend or supplement general conditions (more specific)
Approximate Estimates - (Panel Unit Cost Estimate)
an analysis based on assumed unit costs per square foot of floors, perimeter walls, partition walls, ceilings, and roof
Approximate Estimates - (Modular Takeoff Estimate)
an analysis based on the estimated cost of a representative module cost of entire structure, plus the estimators's assessment of common central systems
Approximate Estimates - (Cost-Per-Function Estimate)
an analysis based on the estimated cost per item of use i.e. cost per patient, student, seat, car space, or unit of production
Approximate Estimates - (Partial Takeoff Estimate)
an analysis using quantities of composite work items that are priced using estimated unit costs include probably costs of concrete in place, per cubic yard; structural steel erected, per ton; excavation, per bank cubic yard; hot-mix paving in place, per ton; and the like
Approximate Estimates - (Square-Foot Cost Estimate)
an approximate cost obtained by using an estimated price for each square foot of gross floor area
Approximate Estimates - (Cubic-Foot Cost Estimate)
an estimate based on an approximated cost for each cubic foot of the total volume enclosed
Approximate Estimates - (Parameter Cost Estimate)
an estimate involving unit costs, called parameter costs, for each of several different building components or systems unit costs can be based on dimensions or quantities of the components themselves or on the common measure of building square footage costs include site work, foundations, floors, exterior walls, interior walls, structure, roof, doors, glazed openings, plumbing, heating and ventilating, electrical work, etc...
Bank measure
are amounts obtained by using dimensios of holes excavated or filled with no adjustments made to quantities obtained for swell or compaction of materials.
Set-Asides
are jobs "Set-Aside" for only contractors who can satisfy specific criteria i.e. U.S. Small Business Administration (SBA), certain federal construction projects are set aside for small contractors Or Disadvantaged Business Enterprises (DBEs)
what is required before calculations of cut-and-fill volumes can be made using the "grid method"?
at intervals along centerline of the construction, a survey of the existing ground elevations of each of the centerline then mark and plot stations at intervals
Qualification
based on experience, competence, and financial criteria Prequalification allows only qualified companies to bid, common with public and highway projects Postqualification determines qualified companies after bids are in
Why is it important for the estimator to carefully examine the site of the work before the estimate is prepared?
because infomation from drawings do not accurately show the true prediction of what could be found at the site and the estimator has the opportunity to fact-check the quantity takeoff and should make use of a query checklist during the site visit which reveals site conditions which will impact the pricing of excavation
cost performance baseline
becomes the authorized time-phase budget at completion. This budget at completion is used to monitor cost performance over the life of the project
Prebid Meeting
between estimators and supervisors Why? to explore alternative construction procedures that might be followed and to make tenantive decisions regarding methods, equipment, personnel, and time schedules between owner, prime contracts, and / or major subcontractors who are submitting proposals Why? owner has opportunity to review project requirements, emphasize certain aspects of proposed work, clarify difficult points, and answer questions
FC per unit
changes in opposite direction as change in activity level
Reporting Services provide
complete coverage of bidding and construction activity within different specified localities and informs contractors and subcontractors who their competition is for specific projects Marshall Swift
Project Overhead
costs that do not pertain directly to any given construction work item are necessary for ultimate job completion generally constitute 5% to 15% of total cost of project examples: security forces, project manager, general superintendent, heat, electricity, water, storage, telephone, permits and fees, etc...
Describe the use of digitizers and explain the difference between the two main types of digitizers.
digitizers are electronic devices that take measurements from drawings and input data directly into a computer program and information regarding dimensions, volumes and items to systematically determined the cut and fill volumes
Estimating
done before before physical performance requires detailed study of bidding documents
Why is the process of measuring excavation different from measuring the work of other trades?
drawings do not give detail or accurate information regarding measurements of excavation
Professional Quantity Surveyors
hired out to make quantity surveys and cost estimates
Compaction factor
is the compaction difference between the excavated volume material and the density volume which it has to be backfilled
Swell Factor
is the increased ("fluff") difference between the natural state of material in volume when excavated, which is less dense
Reporting Services
larger cities have plan service centers centers publish and distribute bulletins that describe all projects, public and private, to be bid in the near future within that locality Centers keep bidding documents on files for the used of subscribing general contractors, subcontractors, material dealers, and other interested parties i.e. Dodge Reports, published by the Dodge Division of McGraw-Hill Information Services Company
Why is it important for an estimator to be knowledgeable of the OSHA requirements regarding excavations?
laws are enforced regarding the depth of excavation and costs for mandatory structures have to be considered regarding the safety of laborors during excavation to prevent cave-ins of the earth embankments
Direct costs
materials-labor-equipment-subcontracted items
Concrete formwork
measured in SFCA
Unit Price Estimates
most commonly used for engineering construction can be compiled when quantities of work items may not be precisely determinable but the nature of the work is well defined estimated quantity shown for each item - not guaranteed to be accurate
Lump-Sum Estimates
most commonly used in field of building construction A fixed price is compiled for which the contractor agrees to perform a prescribed package of work in full accordance with the drawings and specifications If cost is higher than projected, contractor takes loss
Advertisement for Bids (Public Projects)
notice must be given to interested construction industry in advance of the bidding on any project financed by public funds All bidders must be treated alike and afforded an opportunity to bid under the same terms and conditions May place adds for bids in newspapers, magazines, trade publications, or other public media
Jobsite Visit
occurs after preliminary examination of drawings and specs Site and Local Conditions studied: - project location - probable weather conditions - availability of electricity, water, telephone, sewage, etc... - local ordinances and regulations - adjacent properties - storage and construction operational facilities - surface topography and drainage - subsurface soil, rock, and water conditions - underground obstructions and services - transportation and freight facilities - conditions affecting hiring, housing, and feeding of workers - materials pries and delivery information from local dealers - rental of construction equipment - local contractors - wrecking and site clearing information developed during site visit may be recorded in a signed report (& added to estimate forms) bring camera, tape recorder, measuring tape, and other aids
Cost Summaries
once quantity survey is completed, total amount of each work classification is obtained and listed each work classification entered on a summary is identified by a cost account numbers - allows for cost management
When are Lump-Sum Estimates applicable?
only when the nature of work and quantities involved are well defined in the bidding documents can benefit the owner
Invitational Bidding
owner selects a few price contractors to bid offers owner advantage of competition while selecting number of bidders
Bidding Procedures - Public Owners
procurement statutes dictate rules and regulations that must be followed by the public owner public bidding statues are designed to protect the public interest, not that of the contractor or Architect-Engineer Essential purpose to protect funds; prevent fraud, collusion, and favoritism, and obtain quality construction at fair prices
American Society of Professional Estimators (ASPE)
represents estimators working for contractors
American Association of Cost Engineers (AACE)
represents estimators working for large industrial owners
Lump-Sum Estimate - Quantity Survey (aka Quantity Takeoff)
required by lump-sum method is a complete listing of all the materials and items of work that will be required from this base contractor computes cost of materials, labor, equipment, subcontracts, overhead, contract bond, and tax - add in the markup
Unit-Price Estimates - Quantity Survey
separate survey made for each bid item serves as basis for computing costs and for checking the accuracy of the Architecture-Engineers's estimated quantities costs are compiled same as Lump-Sum except that, all cost are kept segregated according to the individual bid item to which they apply
why are excavations measured separately in different categories?
the formula method of calculating volume for the categories differ.
What piling work is often performed by the general contractor even when there is a piling subcontractor employed on the project?
the general contractor would have do some preliminary work like layout piles; cutting off the top of piles and removing the excavated material produced in piling operations, the general contractor will have to measure pile work specifying the type and size of pile required and measuring both the number and total length of each type of piling
Approximate Estimates
used when contractor is called on to provide order of magnitude, preliminary, and definitive cost estimates as the design developed and progresses based on some system of gross unit costs obtained from previous construction work
Program Evaluation and Review Technique (PERT)
uses expected value—or weighted average—of critical path tasks to determine project duration by establishing three estimates: most likely, pessimistic, and optimistic. The formula for PERT is optimistic + pessimistic + (4 * most likely) / 6. PERT is used when activity duration estimates are highly uncertain
Types of Estimation
1- Account classification method 2- high low method 3- visual fit method 4- least squares regression method
Inputs of Determine Budget
Activity cost estimates Basis for estimates Scope baseline Project schedule Risk register Resource calendars Agreements Organizational process assets
False
All direct costs for a project are included in either the labor, material, or subcontracting categories.
True
An electrical contractor could be the prime contractor on a project where the main focus of the job is to replace the electrical service of an existing building.
False
Estimating the labor cost of masonry work is easy because the labor productivity rate for all types of masonry work is the same
False
Main office overhead remains basically the same percentage of direct costs regardless of the construction companies size
Issues with least squares regression method
Missing data / outliers Mismatched time periods Allocate and discretionary costs inflation Effects of learning
True
Performance bonds are typically written to 100% of the contract amount.
False
Plans typically describe quality while specifications deal with quantity and location
True
T or F: Estimating using the RS Means Cost Data book would be an example of price guide estimating
True
The general equation for calculating production on many types of construction equipments is production=volume per cycle x cycles per hour
Relevant Range
The range of activity for which variable cost per unit and total fixed costs are constant
False
The type of work being done by the construction worker has no bearing on the amount of workers compensation premium paid by the employer
Total mixed cost
Total variable cost + total fixed cost
Cost function
a mathematical description of how a cost changes with changes in the level of an activity relating to that cost
organizational process assets
are an accumulation of tools, processes, and techniques that are retained by the business in order to standardize processes and practices
project funding requirements
are derived from the cost baseline; it will include all project expenditures, plus ancillary liabilities
management reserves
are for unplanned changes to the project scope and, ultimately, costs. Management reserves are typically not a part of a project's cost baseline, and should be incorporated into the total project budget
key stakeholders
are individuals or a group of individuals whose decisions and actions will directly impact the project
subject matter experts (SMEs)
are individuals with knowledge on a specific topic or trade who provide details that can be used in expert judgment; it's knowledge sharing
enterprise environmental factors
are internal or external factors based on an organization's culture that can impact, negatively or positively, project management options
historical relationships
are most typically aligned to parametric and analogous estimates, involve using project parameters to develop models that protect project costs
resource calendars
are used to determine which resources, as part of the project team, are available to work on specific activities
Relevant range - unless otherwise stated
assume that the relevant range is appropriate for calculations
Project Cost Management
entails processes that break down requirements to the activity level, where control accounts can monitor expenditures
work breakdown structure (WBS)
gives the project manager and team the ability to decompose project-based features to their lowest elements that can be monitored, managed, measured, and delivered upon. Details developed within the WBS permit the project manager to determine the project's critical path and schedule, and provide a tool to develop and deliver project metrics
project scope baseline
incorporates project assumptions into the scope of a project. It contributes to the development of the project Work Breakdown Structure which, in turn, can serve as an analytical tool to help determine risk at the summary, control account, and work package levels
rough order of magnitude
is a framework to guide near-term activity through what will deliver a more specific estimate
cost accounting
is a technique used by finance departments to calculate the cost of developing activities within a project
Develop Project Management Plan
is aligned to the Planning Process Group. The project management plan and subsidiary plans will begin to develop within the planning phase and evolve over time. The project plan is a living document that will be reviewed and revised as the project moves from initiation to completion
three-point estimates
is also known as the PERT technique
analogous estimating
is an estimating technique that uses the values of parameters, such as scope, cost, budget, and duration or measures of scale such as size, weight, and complexity from a previous, similar activity as the basis for estimating the same parameter or measure for a future activity
vendor data analysis
is another method of determining project cost based upon responses provided by vendors that are deemed to be qualified
risk log
is another method used to help determine the level of risk and manage it. The log can be a spreadsheet based template that aligns to the project schedule and details activities within each work package
expert judgment
is knowledge functioning as a project management tool that aids the project manager and project team by providing necessary details and skills on different subject matters
critical path
is the longest path through the project. It's made up of activities with zero float
cost aggregation
is the process of applying work package costs and those details through control accounts to deliver a budget. It delivers cost estimates by aggregating work packages detailed within the work breakdown structure. Those cost estimates can then be aggregated up to a higher level within the work breakdown structure hierarchy and, ultimately, add up to the entire project
cost management plan
is the project team's guidance in how to manage all the processes within the Cost Management knowledge area, including the process of determining budget
Budget at Completion (BAC)
is the sum of all the budgets established for all the work of the project, the work package, the control account, or the schedule activity. It's the total planned value for the work component or project. This figure is used in earned value analysis calculations
Delphi technique
is used to gain consensus among a team of experts. Within this technique, experts participate anonymously and are asked a series of questions provided by a facilitator
100 percent rule
means that a project's work breakdown structure includes all aspects of work within the project - collected and quantified
major disadvantage to high low method
only utilizes two points in determining the cost function. Bad if your high point and low point are outliers.
functional requirements
provide specific details about how the product of the project will work. Based on these requirements, activities will be identified for development to complete a work package that will meet the needs of the project
top-down estimating
provides estimates for high-level activities such as documentation configuration and design without knowing details at the activity level. Top-down estimating is most useful at the early stages of development, when specific activity details may not be required
human resource management plan
provides guidance relative to defining, staffing, managing and ultimately releasing project resources. Because this is a subsidiary plan, it also serves the develop project management plan process. The human resource management plan includes: Roles and responsibilities that detail the function assigned or assumed; the level of authority and autonomy that the project manager and team is expected to work by; the degree of responsibility for assigned duties and tasks allocate to team members and the skills and competencies required to complete assigned activities
