AACE CEP

Question 1

Project cost estimator

Answer 1

Project cost estimators predict the cost of a project for a defined scope, to be completed at a defined location and point of time in the future. Cost estimators assist in the economic evaluation of potential projects by supporting the development of project budgets, project resource requirements, and value engineering. They also support project control by providing input to the cost control baseline. Estimators collect and analyze data on all of the factors that can affect project costs such as: materials, equipment, labor, location, duration of the project, and other project requirements

Question 2

Cost Estimating is

Answer 2

The predictive process used to quantify, cost, and price the resources required by the scope of an investment option, activity, or project. Cost estimating is a process used to predict uncertain future costs. In that regard, a goal of cost estimating is to minimize the uncertainty of the estimate given the level and quality of scope definition.

Question 3

Common steps that are involved in estimating

Answer 3

Step One: Quantification.

Step Two: Costing

Step Three: Pricing

Question 4

Step One: Quantification

Answer 4

Whether using a stochastic estimating approach or a more definitive approach, the elements of scope must first be quantified in order to assign costs

Question 5

Step Two: Costing

Answer 5

Once the scope has been translated into measurable items with quantities, costs can be assigned to those items.

Question 6

Step Three: Pricing

Answer 6

Once the estimate items are costed, it is time to price the estimate, entailing making judgments concerning the anticipated economic environment, competitive situation, allowance for overhead and profit, and other factors to shape the estimate to meet the needs of the parties involved. Often, once the estimate has been priced, it will still need to be conditioned or adapted to specific conditions applicable to the project or product being estimated.

Question 7

What Cost Estimators do:

Answer 7

1. Project cost estimators predict the cost of a project for a defined scope, to be completed at a defined location and a point in time.
2. Cost estimators assist in the economic evaluation of potential projects by supporting the development of project budgets, project resource requirements, and value engineering.
3. Cost estimators support project control by providing input to the cost control baseline.
4. Cost estimators collect and analyze data on all of the factors that can affect project costs such as materials, equipment, labor, location, duration of the project, and other project requirements.

Question 8

1

Elements of cost include

Answer 8

Elements of cost include engineering, design, labor, material, equipment, and any other costs necessary for delivering the scope of work at an agreed‐upon price

Question 9

Direct costs

Answer 9

Direct costs are costs of completing works that are directly attributable to its performance and are necessary for its completion.
In construction, the cost of installed equipment, material, labor and supervision directly or immediately involved in the physical construction of the permanent facility.
In manufacturing, service, and other non‐construction industries: the portion of operating costs that is readily assignable to a specific product or process area.

Question 10

Indirect costs

Answer 10

Indirect costs are costs not directly attributable to the completion of an activity, which are typically allocated or spread across all activities on a predetermined basis.
In construction, (field) indirects are costs which do not become a final part of the installation, but which are required for the orderly completion of the installation and
may include, but are not limited to, field administration, direct supervision, capital tolls, startup costs, contractor’s fees, insurance, taxes, etc.
In manufacturing, costs not directly assignable to the end product or process, such as overhead and general purpose labor, or costs of outside operations, such astransportation and distribution. Indirect manufacturing costs sometimes include insurance, property taxes, maintenance, depreciation, packaging, warehousing, and
loading.

Question 11

1

What is cost?

Answer 11

1

Cost is the value of an activity or asset. Generally, this value is determined by the cost of the resources that are expended to complete the activity or produce the asset. Resources utilized
are categorized as material, labor, and “other.” Although money and time are sometimes thought of as resources, they only implement and/or constrain the use of the physical resources just listed.

Question 12

1

COST ACCOUNTING

Answer 12

1

The historical reporting of actual and/or committed disbursements (costs and expenditures) on a project. Costs are denoted and segregated within cost codes that are defined in a chart of accounts. In project control practice, cost accounting provides the measure of cost commitment and/or expenditure that can be compared to the measure of physical completion (or earned value) of an account

Question 13

1

COST BREAKDOWN STRUCTURE (CBS)

Answer 13

1

A hierarchical structure that divides budgeted resources into elements of costs, typically labor, materials and other direct costs. The lowest level, when assigned responsibility, typically defines a cost center.

Question 14

1

TRENDING

Answer 14

1

A review of current progress compared to last reported progress which, when displayed graphically, shows whether a course correction is necessary to achieve the baseline plan

Cost trending is established from historical cost acconting information

Question 15

1

Cost forecasting

Answer 15

1

Is a prediction of cost at completion for elements that are in progress.

Estimating is prediction for future activities

Question 32

1

ANALYSIS

Answer 32

1

The examination of a complex whole and the separation and identification of its constituent parts and their relationships.

Question 33

2

BASELINE

Answer 33

1

In project control, the reference plans in which cost, schedule, scope and other project performance criteria are documented and against which performance measures are assessed and changes noted.
2

The budget and schedule that represent approved scope of work and work plan. Identifiable plans, defined by
databases approved by project management and client management, to achieve selected project objectives. It
becomes basis for measuring progress and performance and is baseline for identifying cost and schedule
deviations

Question 34

1

Codes of Accounts

Answer 34

1

A systematic coding structure for organizing and managing scope, asset, cost, resource, work, and schedule activity information.

A COA is essentially an index to facilitate finding, sorting, compiling, summarizing, or otherwise managing information that the code is tied to. A complete code of accounts includes definitions of the content of each account

Question 35

1

DEMING CYCLE

Answer 35

1

PLAN

DO

CHECK

ACT

(PDCA) CYCLE.

Question 36

1

VALUE ENGINEERING

Answer 36

1

A practice function targeted at the design itself, which has as its objective the development of design of a facility or item that will yield least life-cycle costs or provide greatest value while satisfying all performance and other criteria established for it

Question 37

1

Scope

Answer 37

1

The sum of all that is to be or has been invested in and delivered by the performance of an activity or
project

Question 38

1

The goal of estimate classification

Answer 38

1

The goal of estimate classification is to define the technical and project deliverables required to prepare an effective estimate.

Question 39

1

ACCURACY

Answer 39

1

Correctness that the measured value is very close to the true value

Question 40

1

What is the end usage of Class 1

Answer 40

1

Check estimate or bid / tender

Question 41

1

What is the end usage of Class 2

Answer 41

1

Control or bid / tender

Question 42

1

What is the end usage of Class 3

Answer 42

1

Budget authorization or control

Question 43

1

What is the end usage of Class 4

Answer 43

1

Concept study or feasibility

Question 44

1

What is the end usage of Class 5

Answer 44

1

Screening of feasibility

Question 45

1

What is the methodology for Class 1

Answer 45

1

Deterministric

Detailed unit cost with detailed take off

Question 46

1

What is the methodology for Class 2

Answer 46

1

Primarily deterministic

Detailed unit cost with forced detailed take off

Question 47

1

What is the methodology for Class 3

Answer 47

1

Mixed but primarily stochastic

Semi detailed unit cost with assembly level line items

Question 48

1

What is the methodology for Class 4

Answer 48

1

Primarily stochastic

Equipment factored or parametric models

Question 49

1

What is the methodology for Class 5

Answer 49

1

Stochastic (factors or models) or judgment

Capacity factor, parametrics models

Question 50

1

primary parameter for the classification of estimates

Answer 50

1

maturity level of project definition upon which the estimate is based

purpose of the estimate

methodology used in development of the estimate

acuracy of the estimate

relative effort required to produce the estimate

Question 51

1

ACCURACY RANGE

Answer 51

1

An expression of an estimate’s predicted closeness to final actual costs or time. Typicallyexpressed as high/low percentages by which actual results will be over and under the estimate along with the confidence interval these percentages represent

Question 52

1

Allowance

Answer 52

1

For estimating, resources included in estimates to cover the cost of known but undefined requirements for an individual activity, work item, account or sub-account.

Question 53

1

Contingency

Answer 53

1

An amount added to an estimate to allow for items, conditions, or events for which the state, occurrence, or effect is uncertain and that experience shows will likely result, in aggregate, in additional costs

Question 54

1

KNOWN-UNKNOWN

Answer 54

1

An identifiable quantity or value having variability or an identifiable condition lacking certainty

Question 55

1

UNKNOWN-UNKNOWN

Answer 55

1

A quantity, value or condition that cannot be identified or foreseen, otherwise referred to as unknowable

Question 56

1
The term “unit hours” refers to

Answer 56

1

Work hours per unit of production.

Question 57

1

LEARNING CURVE

Answer 57

1

A graphic representation of the progress in production effectiveness as time passes

Question 58

1

PROFITABILITY

Answer 58

1

A measure of the excess income over expenditure during a given period of time

Question 59

1

PROFITABILITY ANALYSIS

Answer 59

1

The evaluation of the economics of a project, manufactured product, or service within a specific time frame.

Question 60

1

VARIANCE

Answer 60

1

The difference between what was originally expected and what actually happened

Question 61

1

The key areas are to be practice by the Cost Estimator

Answer 61

1

The key areas are: Ethics; Leadership; Information Management; Quality Management; Value Management; Health and Safety. If all of these are practiced by the Cost Estimator, there will be continuous improvement in the estimating process and the final project or process that is being produced.

Question 62

1

What allows an ethical behavior, well develop database

Answer 62

1

Ethical behavior leads to a more harmonious society.
A well‐developed database leads to a quality estimate.
The input of cost estimating is important to value engineering to provide a more effective project.
The continuous use of the Deming Cycle (Plan‐Do‐Check‐Act) leads to better estimates.

Question 63

1

CONCEPT PHASE

Answer 63

1

First phase of a project in which need is examined, alternatives are assessed, the goals and objectives of the project are established and a sponsor is identified

Question 64

1

PARAMETRIC ESTIMATE

Answer 64

1

In estimating practice, describes estimating algorithms or cost estimating relationships that are highly probabilistic in nature

Question 65

1

Location Factor

Answer 65

1

An instantaneous (current – has no escalation or currency exchange projection) overall total project factor for translating the summation of all project cost elements of a defined construction project scope of work, from one geographical location to another. Location factors include given costs, freights, duties, taxes, field indirects, project administration, and engineering and design. Location factors do not include the cost of land,scope/design differences for local codes and conditions, and the cost for various operating philosophies.

Question 66

1

Uncertainty

Answer 66

1

The total range of events that may happen and produce risks (including both threats and opportunities) affecting a project (Uncertainty = threats + opportunities.)

2

All events, both positive and negative whose probabilities of occurrence are neither 0% nor 100%. Uncertainty is a distinct characteristic of the project environment.

Question 67

1

Strategic Risk

Answer 67

1

A risk for which the potential impact threatens a project objective, even if the probability of occurrence is low or risk matrix severity rating is within screening thresholds. In projects, these risks are generally funded through management reserves.

Question 68

1

TACTICAL RISK

Answer 68

1

Risk for which the potential impact does not significantly threaten an overall project objective or have a significant potential impact on enterprise, portfolio or other higher objectives or plans beyond the project level.

Question 69

1

Risk Management goal

Answer 69

1

Risk Management is designed to reduce the risk caused by uncertainty.

Question 70

1

Range estimating

Answer 70

1

A formalized risk analysis technology that synergistically combines Pareto’s law to identify the relatively few critical elements, heuristics governing the assignment of probabilistic ranges to such elements, and Monte Carlo Simulation to provide decision making information quickly and at reasonable effort.

Question 71

1

CONTRACT, COST PLUS CONTRACTS

Answer 71

1

In cost plus contracts the contractor agrees to furnish to the client services and material at actual cost, plus an agreed upon fee for these services. This type of contract is employed most often when the scope of services to be provided is not well defined.

Question 72

1

methods of estimating algorithms:

Answer 72

1

There are five major methods of estimating algorithms:
Factored
End‐Product Unit
Capacity Factor
Physical Dimension
Parametric

Question 73

1

Factored Estimates

Answer 73

Ratio or factored estimating methods are used in situations where the total cost of an item or facility can be reliably estimated from the cost of a primary component. Two of the most popular types of this method are the Lang and Hand Factors. Both the Lang and Hand Factors are based on the cost of equipment in a process plant. The Lang Factor is a ratio of the equipment cost to the total installed plant cost. The Hand Factor is a ratio of the individual equipment item cost to the direct field cost of the installed item, excluding instrumentation.

The Hand Factor does not account for project indirect costs.

Question 74

1

End‐Product Unit Estimate

Answer 74

1

This method is used when the estimator has enough historical data available from similar projects torelate the end‐product units (capacity units) of a project to its construction costs.

Question 75

1

Capacity Factor Method

Answer 75

1

A capacity‐factored estimate is one in which the cost of a new facility is derived from the cost of a similar facility of a known (but usually different) capacity.

Question 76

1

Parametric Method

Answer 76

1

A parametric estimate comprises cost estimating relationships (CERs) and other parametric estimating functions that provide logical and repeatable relationships between independent variables, such as design parameters or physical characteristics and the dependent variable, cost. A very simple example of this would be a highway where the concrete, reinforcing, and finishing are of constant cross section and the only input needed to calculate the quantities is length.

Question 77

1

attributes that make a good code of accounts

Answer 77

1

There are four attributes that make a good code of accounts

Usage: The code of accounts must be designed in a way that serves the stakeholders needs.

Content: The amount of content that can be included in a code is limitless, but it must be restricted to a level that does not become burdensome to the users.

Structure and Format: Structure and format increases usability and providing definitions of all elements in a reference dictionary or similar document improves clarity.

Standardization: A consistent coding structure on all projects assists users and provides a better historical record.

Question 78

1

BENCHMARKING

Answer 78

1

A measurement and analysis process that compares practices, processes, and relevant measures to those of a selected basis of comparison (i.e., the benchmark) with the goal of improving performance.

Question 79

1

Which are the main Estimating Processes and Practices

Answer 79

1

Planning the Estimate
Estimating Methodologies
Quantification
Costing
Pricing
Estimate Conditioning
Risk Evaluation and
Contingency Determination
Estimate Documentation
Estimate Reconciliation
Estimate Review and
Validation
Estimate Reporting
Estimate Closeout

Question 80

1

The initial step in estimating is to prepare a plan to go forward. The major steps are to:

Answer 80

1

Determine the purpose of the estimate

Determine the needs of the stakeholders

Determine the scope

Identify responsibilities

Prepare a timeline.

Question 81

1

WORK BREAKDOWN STRUCTURE

Answer 81

1

Framework for organizing and ordering the activities that makes up a project. Systematic approach to reflect a top-down product oriented hierarchy structure with each lower level providing more detail and smaller elements of the overall work.

Question 82

1

The selection of estimating methodologies depends on

Answer 82

1

The selection of estimating methodologies depends on the level of scope definition, the time available to prepare the estimate, the purpose of the estimate, and the resources and tools available for the estimating effort.

Question 83

1

what is Take‐off

Answer 83

1

a specific type of quantification that is a measurement and listing of quantities of materials from drawings in order to support the estimate costing process and/or to support the material procurement process

Question 84

1

BATTERY LIMIT

Answer 84

1

Comprises one or more geographic boundaries, imaginary or real, enclosing a plant or unit being engineered and/or erected, established for the purpose of providing a means of specifically identifying certain portions of the plant, related groups of equipment, or associated facilities

Question 85

1

QUANTITY SURVEYING

Answer 85

1

A formalized method of periodically (typically monthly) detailing the actual progress accomplished on individual activities and the units of work performed or put in place.

Question 86

1

LABOR BURDEN

Answer 86

1

Fringe benefits plus taxes and insurances the employer is required to pay by law based on labor payroll, on behalf of or for the benefit of labor

Question 87

1

OVERHEAD

Answer 87

1

A cost or expense inherent in the performing of an operation, (e.g., engineering, construction, operating, or manufacturing) which cannot be charged to or identified with a part of the work, product or asset and, therefore, must be allocated on some arbitrary base believed to be equitable, or handled as a business expense independent of the volume of production

Question 88

1

Burden

Answer 88

1

In construction, the cost of maintaining an office with staff other than operating personnel. Also includes federal, state and local taxes, fringe benefits and other union contract obligations. In manufacturing, burden sometimes denotes overhead.

Question 89

1

Labor productivity

Answer 89

1

A measure of production output relative to labor input.

Question 90

1

LABOR PRODUCTIVITY FACTOR

Answer 90

1

A value by which a labor productivity measure for a reference project or activity is multiplied to obtain an adjusted productivity measure for the same of similar project or activity under a different set of conditions

Question 91

1

The process of costing relies on what?

Answer 91

1

The process of costing relies on the estimator’s knowledge of the nature of the scope of work and the resources available for production.

Question 92

1

Pricing

Answer 92

1

Pricing is defined as “the amount of money asked or given for a product” (example., exchange value). The chief function of price is rationing the existing supply among prospective buyers. While quantification and costing are the responsibility of the project cost estimator, pricing is the responsibility of management.

In a project context, pricing is a term used to describe the process of adjusting estimated costs for specific project terms and conditions and commercial terms or market conditions

Question 93

1

The inputs to the pricing process include

Answer 93

1

The inputs to the pricing process include individual item costs, knowledge of the organization’s overhead costs and profit requirements, as well as the current conditions affecting the competitive market situation.

Question 94

1

pricing objectives

Answer 94

1

maximization of short‐term profit, maximization of long‐term profit, market penetration, etc.

Question 95

1

DAMAGES, LIQUIDATED

Answer 95

1

An amount of money stated in the contract as being the liability of a contractor for failure to complete the work by the designated time

Question 96

1

Conditioning

Answer 96

1

Conditioning is adjusting the estimate to conform to all contract conditions. Contract conditions define the rights and obligations of the contracting parties.

Question 97

1

Front End Loading

Answer 97

1

Defining the project scope and plans in a way that assures the best practical level of definition is achieved as needed to support a project decision gate.

Question 98

1

Documentation of the cost estimate is critical because

Answer 98

1

Documentation of the cost estimate is critical because it provides an accurate audit of the project cost history and becomes the basis for change management and dispute resolution.

Question 99

1

The process of estimate reconciliation consists

Answer 99

1

The process of estimate reconciliation consists of resolving or otherwise reconciling variances between the estimate and any previous versions of the estimate, any alternative expectations of the value of the estimate, or any estimates based on a similar scope of work. The process of reconciliation identifies any cost differences due to changes in scope (i.e., quantity), pricing, methods of accomplishment, or risk between the two versions of the estimate.

Question 100

1

What is included in a well prepared estimate variance report?

Answer 100

1

A well‐prepared estimate variance report will describe any significant differences in scope,
pricing, or risk resulting in differences between any two estimates or an estimate and an accounting being reconciled.

Question 101

1

When occurs reconciliation?

Answer 101

1

Reconciliation should occur when the differences between two estimates for the same scope of work are greater than or less than an established threshold; i.e., 10% of total estimated cost.

Question 102

1

ADDENDA

Answer 102

1

Written or graphic instruments issued prior to the date for opening of bids which may interpret or modify the bidding documents by additions, deletions, clarification, or corrections.

Question 103

1

The essential steps in review of an estimate include

Answer 103

1

The essential steps in review of an estimate include:

Review of the Basis of Estimate (BOE).

Thorough review of the estimate documents to assure all addenda, drawings, quotes, and other items have been included.

Perform random checks of quantity take‐offs, wage rates, unit pricing, etc.

Validation of the estimate, comparing the cost against other project baselines and performing “sanity checks” of the components and total of the estimate.

Question 104

1

What is the Estimate closeout?

Answer 104

1

Estimate closeout is the process of organizing and storing all information for an estimate for future use, to support the development of historical archives, and the development of estimating tools

Question 105

1

How to close out an estimate?

Answer 105

1

It is always a good idea at the completion to have an estimating team meeting to review how things went during the estimate: What went well? What went poorly? How can we do it better next time?

The other action at estimate closeout is to update the historical database with whatever information has been obtained during the estimating process

The final action of the closeout is to assure that all documents are properly filed so that they will be readily available to all stakeholders who may need them in the later project phases

If the project will now be moving into the construction phase it would be appropriate to meet with the project control team to help transition the estimate to the baseline budget and to familiarize them with the estimate, scope, risks, and opportunities learned.

Question 106

1

What is bidding

Answer 106

1

Bidding is the process of submitting a formal proposal to enter into an agreement to provide a service, product, or project in return for an identified price.

Question 107

1

Factors involved in bid preparation and analysis include:

Answer 107

1

the nature of the prospective project

how closely the organization’s resources, abilities, and experience match its requirements

other expected bidders

Experience with the owner, architect/engineer, and other parties expected to be involved

the availability of qualified subcontractors and vendors

subjective evaluation of the risk factors of undertaking the project and how well the organization can manage those risks.

Question 108

1

Addenda

Answer 108

1

Written or graphic instruments issued prior to the date for opening of bids which may interpret or modify the bidding documents by additions, deletions, clarification, or corrections.

Question 109

1

budgeting

Answer 109

1

Cost Engineering Terminology defines budgeting as “a process used to allocate the estimated cost of resources into cost accounts (i.e., the cost budget against which cost performance will be measured and assessed”. That is to say that once we have completed the estimating process, if the project continues, that estimate become a basis to measure changes that occur.

Question 110

1

What is life cycle costs ?

Answer 110

1

life cycle costs are the sum of every cost incurred for a particular item (project, product, etc.) over its lifetime from inception through disposal

Question 111

1

Working capital

Answer 111

1

The funds in addition to fixed capital and land investment which a company must contribute
to the project (excluding startup expense) to get the project started and meet subsequent obligations as they come due. Working capital includes inventories, cash and accounts receivable minus accounts payable.

Question 112

1

GENERAL & ADMINISTRATIVE COSTS (G&A)

Answer 112

1

The fixed cost incurred in the operation of a business. G&A costs are also associated with office, plant, equipment, staffing, and expenses thereof, maintained by a contractor for general business operations.

Question 113

1

PROGRESS MILESTONES

Answer 113

1

Those project milestones identified as the basis for earning progress and/or making progress payments

Question 114

1

SCHEDULE OF VALUES

Answer 114

1

A detailed statement furnished by a construction contractor, builder, or others, apportioning the contract value into work packages. It is used as the basis for submitting and reviewing progress payments.

Question 115

1

what provides The cash flow net?

Answer 115

1

The cash flow net provides the company with information needed to determine the finances necessary to support the project.

Question 116

1

Retention

Answer 116

1

The amount of money held from a payment to assure project completion and compliance

Question 117

1

LETTER OF CREDIT

Answer 117

1

A vehicle that is used in lieu of retention and is purchased by the contractor from a bank for a predetermined amount of credit that the owner may draw against in the event of default in acceptance criteria by the contractor

Question 118

1

CRITICAL PATH METHOD (CPM)

Answer 118

1

Technique used to predict project duration by analyzing which sequence of activities has least amount of scheduling flexibility. Early dates are figured by a forward pass using a specific start date and late dates are figured by using a backward pass starting from a completion date.

Question 119

1

EARNED VALUE CONCEPT

Answer 119

1

In general (non-EVMS) terms, the objective measurement at any time of work accomplished (performed) in terms of budgets planned for that work, and the use of these data to indicate contract cost and schedule performance.

Question 120

1

EARNED VALUE MANAGEMENT

Answer 120

1

A project progress control system that integrates work scope, schedule, and resources to enable objective comparison of the earned value to the actual cost and the planned schedule of the project

Question 121

1

What is cost control baseline

Answer 121

1

The cost control baseline is an extension of the budgeting process that merges the estimate costs and managed resources into the schedule for Earned Value Management (EVM).

Question 122

1

What is budgeting

Answer 122

1

A process used to allocate the estimated cost of resources into cost accounts (i.e., the cost budget) against which cost performance will be measured and assessed.

Question 123

1

what is needed to marry the estimate to the schedule for Earned Value Management

Answer 123

1

The most critical factor to success is a code of accounts relationship between the estimate and schedule coding.

Question 124

1

The Cost Control Baseline takes the budgeting process one step further by

Answer 124

1

Integrating the estimate with the schedule

Question 125

1

What is Building Information Modeling (BIM)

Answer 125

1

Building Information Modeling (BIM) refers to a digital representation of the physical and functional characteristics of a facility. A BIM is a shared knowledge resource for information about a facility forming a reliable basis for decisions during the facility’s life‐cycle. A BIM is a shared resource for stakeholders to insert, extract, update or modify information in the BIM to support or reflect the roles of that stakeholder.

BIM is 3D, 4D, and 5D data‐rich representations of a facility created with intelligent objects.

Question 126

1

What is Building Information Modeling (BIM)

Answer 126

1

Building Information Modeling (BIM) refers to a digital representation of the physical and functional characteristics of a facility. A BIM is a shared knowledge resource for information about a facility forming a reliable basis for decisions during the facility’s life‐cycle. A BIM is a shared resource for stakeholders to insert, extract, update or modify information in the BIM to support or reflect the roles of that stakeholder.

BIM is 3D, 4D, and 5D data‐rich representations of a facility created with intelligent objects.

Question 127

1

MAXIMUM OUT-OF-POCKET CASH

Answer 127

1

The highest year-end negative cash balance during project life.

Question 128

1

What are The dimensions for modeling the information and geometry about a facility

Answer 128

1

The dimensions for modeling the information and geometry about a facility are: 3D graphical modeling, 4D time modeling, and 5D cost modeling

Question 129

1

What does the term “intelligent object” mean and how do intelligent objects affect a cost estimate using a BIM

Answer 129

1

Information for cost estimating in BIM is extracted directly from the design model through technology that is either interoperable or it is integrated between the technologies.

Question 130

1

How does each Level of Detail in a BIM relate to the cost estimate?

Answer 130

1

The Level of Detail in a design model guides the cost estimating activities for which that BIM may be used.

Question 131

1

EQUITABLE ADJUSTMENT

Answer 131

1

A contract adjustment in price or time under, certain contract clauses, or both, to compensate the contractor expense incurred due to actions of the owner or to compensate the owner for contract reductions.

Question 132

1

Who has the the burden of proof?

Answer 132

1

Whether the change order request came from the owner or the contractor, the burden of proof is the responsibility of the requester.

Question 133

1

WORK PACKAGE

Answer 133

1

A segment of effort or work scope required to complete a specific job which is within the responsibility of a single unit within the performing organization

Question 134

1

UNBALANCING

Answer 134

1

A technique used in the pricing process to allocate estimated costs to accounts whose definitions do not fully reflect the nature of the cost being allocated

Question 135

1

EARNED VALUE

Answer 135

1

Measure of the value of work performed so far, also called the budgeted cost of work performed (BCWP). The “value” of the work earned at the date of analysis (data date)

Question 136

1

COST PERFORMANCE INDEX/INDICATOR (C P I)

Answer 136

1

The ratio of earned value to actual costs (C P I = B C W P divided into A C W P )

Question 137

1

Difference between Capital and O&M Cost

Answer 137

1

Generally a capital expenditure is for new equipment or facility or a significant repair or replacement of that facility. It will have more than a one-year life. O&M expenditures are generally repairs to existing equipment or facilities that represent much less than the value of the items which are being repaired

Question 138

1

Why is important the estimate classification

Answer 138

1

Estimate classifications assist all parties in gaining a mutual understanding of the basis of the estimate.

Question 139

1

PROJECT DEFINITION

Answer 139

1

Process of exploring thoroughly all aspects of proposed project and to explore relations between required performance, development time and cost

Question 140

1

Most Likely Value

Answer 140

1

In risk analysis, usually refers to the mode of a distribution. If the distribution is multimodal, uniform or complex, this may express the estimator’s judgment

Question 141

1

RISK ANALYSIS

Answer 141

1

A risk management process step (part of risk assessment) and methodology for qualitatively and/or quantitatively screening, evaluating and otherwise analyzing risks to support risk treatment and control.

Question 142

1

Exposure

Answer 142

1

In risk management, refers to the potential or actual impact of one or more risk events or conditions

Question 143

1

MITIGATION

Answer 143

1

A risk response strategy for threats intended to reduce consequences and/or the probability of occurrence. In contracting, refers to the affirmative obligation of each party to a contract to take action to decrease, lessen or minimize damages (time and money) to the other party

Question 144

1

OPPORTUNITY

Answer 144

1

Uncertain event that could improve the results, or improve the probability that the desired outcome will happen.

Question 145

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What is the porpouse of risk management?

Answer 145

1

Risk Management is designed to reduce the risk caused by uncertainty.

Question 146

1

What is an algorithm

Answer 146

1

An algorithm is a procedure that produces the answer to a question or the solution to a problem in a finite number of steps.

Question 147

1

What are direct field costs

Answer 147

1

Engineering and construction costs associated with the construction site rather than with the home office.

Question 148

1

Whai is pricing

Answer 148

1

the amount of money asked or given for a product

Question 149

1

GENERAL & ADMINISTRATIVE COSTS (G&A)

Answer 149

1

The fixed cost incurred in the operation of a business. G&A costs are also associated with office, plant, equipment, staffing, and expenses thereof, maintained by a contractor for general business operations.

Question 150

1

Conditioning

Answer 150

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Conditioning is adjusting the estimate to conform to all contract conditions. Contract conditions define the rights and obligations of the contracting parties. They include “general conditions” and “special conditions

Question 151

1

BOND, BID

Answer 151

1

A bond that guarantees the bidder will enter into a contract on the basis of the bid.

Question 152

1

RESOURCE

Answer 152

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Any consumable, except time, required to accomplish an activity. From a total cost and asset management perspective, resources may include any real or potential investment in strategic assets including time, monetary, human, and physical. A resource becomes a cost when it is invested or consumed in an activity or project.

Question 153

1

COST

Answer 153

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In project control and accounting, it is the amount measured in money, cash expended or liability incurred, in consideration of goods and/or services received.

Question 154

1

Life-Cycle Costs (LCC)

Answer 154

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Cost that are associated with an asset, and they extend the cost management information beyond the acquisition, (creation) of the asset to the use and disposal of the asset

Question 155

1

OPPORTUNITY COSTS –

Answer 155

1

The value of a lost opportunity of an alternative that is not selected

Question 156

1

Cost Classifications methods

Answer 156

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COSTING, ACTIVITY BASED (ABC) – Costing in a way that the costs budgeted to an account truly represent all the resources consumed by the activity or item represented in the account. In the ABC approach, resources that are used are assigned to activities that are required to accomplish a cost objective

A code of accounts (sometimes referred to as a chart of accounts or as cost code of accounts) is a systematic numeric method of classifying various categories of costs incurred in the progress of a job

Question 157

1

ACCRUAL –

Answer 157

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In earned value management, the actual costs that are recorded for goods and/or material received or services rendered before payment.

Question 158

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BULK MATERIAL –

Answer 158

1

Material bought in lots.

Question 159

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CRUDE MATERIALS –

Answer 159

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Includes products entering the market for the first time which have not been fabricated or manufactured but will be processed before becoming finished goods

Question 160

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DEMURRAGE –

Answer 160

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A charge made on cars, vehicles, or vessels held by or for consignor or consignee for loading or unloading, for forwarding directions or for any other purpose.

Question 161

1

Materials types:

Answer 161

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Raw

Bulk

Fabricated

Engineered or designed

Consumables

Question 162

1

What influence the Purchase costs of materials

Answer 162

1

Market pricing (pre-negotiated vs. competitively bid, etc.)

Order quantity

Taxes and duties

Carrying charges

Cancellation charges

Demurrage

Hazardous material regulations

Warranties, maintenance and service

Question 163

1

What influence the cost of Materials management costs:

Answer 163

1

Delivery schedule

Packing

Shipping and freight

Freight forwarding

Handling

Storage and inventory

Agent cost

Surveillance or inspection

Expediting

Losses (shrinkage, waste, theft, damage)

Spare parts (inventory or start-up)

Surplus material

Question 164

1

How to select the appropriate estimate methodologies to be used?

Answer 164

1

To make this selection, it is important to properly evaluate the level of scope information upon which the estimate is based, to fully understand the intended purpose of the estimate, and to establish the format for estimate presentation.

Question 165

1

Whih are the Estimating Processes & Practices?

Answer 165

1

Planning the Estimate
Estimating Methodologies
Quantification
Costing

Pricing
Estimate Conditioning
Risk Evaluation and
Contingency Determination
Estimate Documentation
Estimate Reconciliation
Estimate Review and
Validation
Estimate Reporting
Estimate Closeout

Question 166

1

Planning the Estimate

Answer 166

1

is to prepare a plan to go forward. The major steps are to:

Determine the purpose of the estimate
Determine the needs of the stakeholders
Determine the scope
Identify responsibilities
Prepare a timeline.

Question 167

1

Which is one of the mayot major part of planning the estimate?

Answer 167

1

Transferring the estimate to the cost control phase needs to be a major part of the plan. This generally means developing the code of accounts and/or work breakdown structure that will be used for the project.

Question 168

1

DEFINITION PHASE

Answer 168

1

An early phase in the project life cycle when the scope is defined.

Question 169

1

PROJECT DEFINITION

Answer 169

1

Process of exploring thoroughly all aspects of proposed project and to explore relations between required performance, development time and cost.

Question 170

1

PROJECT PLAN

Answer 170

1

The primary document for project activities. It covers the project from initiation through completion

Question 171

1

Professional judgment is essential regardless of the estimating methodology utilized. However, Can the professional judgment of an experienced estimator or estimating team stand alone as an estimating method for conceptual estimates when little scope development has taken place?

Answer 171

1

NO

the professional judgment of an experienced estimator or estimating team cannot stand alone as an estimating method for conceptual estimates when little scope development has taken place

Question 172

1

What are the drivers to select the estimating methodology?

Answer 172

1

The selection of estimating methodologies depends on the level of scope definition, the time available to prepare the estimate, the purpose of the estimate, and the resources and tools available for the estimating effort.

Question 173

1

PARAMETRIC ESTIMATE

Answer 173

1

In estimating practice, describes estimating algorithms or cost estimating relationships that are highly probabilistic in nature (i.e., the parameters or quantification inputs to the algorithm tend to be abstractions of the scope). Typical parametric algorithms include, but are not limited to, factoring techniques, gross unit costs, and cost models

Question 174

1

Take‐off

Answer 174

1

specific type of quantification that is a measurement and listing of quantities of materials from drawings in order to support the estimate costing process and/or to support the material procurement process

Question 175

1

CONSTRUCTABILITY

Answer 175

1

A system (process) for achieving optimum integration of construction knowledge in the construction process, balancing various project and environmental constraints to achieve maximization of project goals and performance

Question 176

1

What is Bill of material (BOM)

Answer 176

1

A bill of materials (BOM) is a detailed quantity take‐off produced in order to facilitate procurement for a project or product.

Question 177

1

What is costing?

Answer 177

1

the application of cost and resources to a quantified scope.”

Question 178

1

BURDEN

Answer 178

1

In construction, the cost of maintaining an office with staff other than operating personnel. Also includes federal, state and local taxes, fringe benefits and other union contract obligations. In manufacturing, burden sometimes denotes overhead

Question 179

1

LABOR BURDEN

Answer 179

1

Fringe benefits plus taxes and insurances the employer is required to pay by law based on labor payroll, on behalf of or for the benefit of labor.

Question 180

1

Overhead cost

Answer 180

1

A cost or expense inherent in the performing of an operation, (e.g., engineering, construction, operating, or manufacturing) which cannot be charged to or identified with a part of the work, product or asset and, therefore, must be allocated on some arbitrary base believed to be equitable, or handled as a business expense independent of the volume of production.

Question 181

1

BID SECURITY

Answer 181

1

Security is provided in connection with the submittal of a bid to guarantee that the bidder, if awarded or offered the contract, will execute the contract and perform the work.

Question 182

1

BOND, BID

Answer 182

1

A bond that guarantees the bidder will enter into a contract on the basis of the bid.

Question 183

1

CONTRACT DOCUMENTS

Answer 183

1

The agreement, addenda (which pertain to the contract documents), contractor’s bid (including documentation accompanying the bid and any post-bid documentation submitted prior to the notice of award) when attached as an exhibit to the agreement, the bonds, the general conditions, the supplementary conditions, the specifications and the drawings as the same are more specifically identified in the agreement, together with all amendments, modifications and supplements issued pursuant to the general conditions on or after the effective date of the agreement

Question 184

1

FRONT END LOADING (FEL).

Answer 184

1

Defining the project scope and plans in a way that assures the best practical level of definition is achieved as needed to support a project decision gate.

Question 185

1

How can an estimate be condicioned

Answer 185

1

Estimates may be conditioned by factoring, modifying escalation, making specific changes to recognize specific conditions, or by a multitude of other means of adjustment.

Conditioning an estimate involves making adjustments to the estimate to suit a specific purpose or to meet certain requirements that have been listed in the general and special conditions in the contract.

Question 186

1

A Performance Bond is:

Answer 186

1

A guarantee that the project will be completed on the terms of the contract

A guarantee that the project will perform as defined in the contract

A guarantee that the project will be performed per all conditions of the contract

Question 187

1

ACCURACY RANGE

Answer 187

1

An expression of an estimate’s predicted closeness to final actual costs or time. Typically expressed as high/low percentages by which actual results will be over and under the estimate along with the confidence interval these percentages represent

Question 188

1

Why the documentation of the estimate is important?

Answer 188

1

Documentation of the cost estimate is critical because it provides an accurate audit of the project cost history and becomes the basis for change management and dispute resolution.

Question 189

1

The essential steps in review of an estimate include?

Answer 189

1

Review of the Basis of Estimate (BOE).

Thorough review of the estimate documents to assure all addenda, drawings, quotes, and other items have been included.

Perform random checks of quantity take‐offs, wage rates, unit pricing, etc.

Validation of the estimate, comparing the cost against other project baselines and performing “sanity checks” of the components and total of the estimate.