Chapter 1

Question 1

What is cost estimation?

Answer 1

Probable total cost of a future activity

Question 2

What is the purpose of cost estimation? (part A)

Answer 2

1. Developing an initial project budget for an owner
2. Determining project feasibility
3. Designing the project within the owner’s budget

Question 3

What is the purpose of cost estimation? (part B)

Answer 3

4. Evaluating alternative designs
5. Preparing bids
6. Re-estimating for an addendum (change in scope during the bidding process)

Question 4

What is the purpose of cost estimation? (part C)

Answer 4

7. Substantiating claims and resolving issues

8. Preparing a payment schedule

Question 5

What are the applications of approximate estimate?

Answer 5

1) Evaluating project feasibility
2) Evaluating cost of proposed design modifications
3) Establishing a preliminary budget for control purposes
4) Screening a number of alternative projects

Question 6

How is an approximate estimate prepared?

Answer 6

Use only basic criteria such as :
Output
Total sqft
Number of units etc’

Question 7

When is it good or not good to rely on an approximate estimate ?

Answer 7

Good:

1) Evaluation of design alternatives
2) Presentation of preliminary construction estimate to the owner

Not good:
Bid purposes

Question 8

List the 4 components of a detailed estimate

Answer 8

1) Estimated cost (materials, labour, equipment, subcontract work)
2) General expenses (Overhead, tax, insurance)
3) Contingency (Risk analysis)
4) Profit ( Top level mgmt)

Question 9

What is the basic approach to prepare detailed estimates?

Answer 9

• Identify work items to be completed
• Measure work items size
• Asses likely cost of work
  (Identify + measure + evaluate cost) of work

Question 10

What are the components of bid estimate (detailed estimate)?

Answer 10

Bid price = Cost estimate +Contingency +General exp + Profit

Question 11

Name factors of contingency

Answer 11

• Experience on similar projects
• Season of construction
• Contract condition
• Project size
• likelihood of profit

Question 12

What is traditional (design - bid - build) delivery?

Answer 12

The project is fully design before work begins

Question 13

What is design-built delivery?

Answer 13

A single organization responsible for design and construction

Question 14

What is construction management delivery?

Answer 14

Facilities overlap between project stages. The main objective is earlier completion

Question 15

What is a public-private partnership?

Answer 15

• Long term contracts between the public and private sector

* Private sector will operate at first and then handover the asset to the public sector

Question 16

Name 3 types of contracts

Answer 16

1) Lump-Sum contracts
2) Cost-plus contracts
3) Unit-price contracts