Cost Estimating

Question 1

Many projects show … caused by

Answer 1

Massive cost and time overruns caused by under estimates

Question 2

The aim of cost estimating is

Answer 2

To predict the most likely cost of the project at each stage in the project

Question 3

Requirements of cost estimating are (5)

Answer 3

Predict most probably cost of works
Predict gusts of programs for works
Identify and quantify problems/risks 
State all assumptions and note exclusions
Forecast of expenditure

Question 4

Cost estimates are carried out at

Answer 4

Every stage

Question 5

Cash flow concerns

Answer 5

The flow of money in and out of an account per time period

Question 6

A project t that brings in money before it is finished (example)

Answer 6

Housing estates

Question 7

Cost=

Answer 7

Cost= cost directly attributable to an element of work, including direct overheads

Question 8

Price=

Answer 8

Cost of an element of work plus allowance for general overheads, insurances, taxes, finance and profit

Question 9

Things included in the price (5)

Answer 9

Permanent works costs
General overhead costs
Taxes
Interest charges on money borrowed 
Allowances or contingencies for risks and uncertainties

Question 10

Average profit margin of a contractor and why

Answer 10

3-5%
Very competitive (4-6 bidding on job)

Question 11

Amount of profit decided by contractor depends on (4)

Answer 11

Type of work
Size of project/contract
Extent of competition
Requirements of organisation to secure work in future

Question 12

BOQ is created by… but

Answer 12

Created by client but partially completed by contractor

Question 13

Included in BOQ

Answer 13

Client-item number
Description
Quantity
Contractor-rate
Price

Question 14

5 cost estimating techniques

Answer 14

Man-hour
Global
Factorial
Unit rates
Operational

Question 15

Man hour technique suitable for and used when

Answer 15

Suitable for labour intensive implementation, construction and operations
Used at construction stage only

Question 16

Total man hours = ..+…+…

Answer 16

Current labour rate+ cost of materials+ cost of equipment

Question 17

To use man hours technique u need….

Uncertainty is caused by…

Answer 17

Need a detailed program

Uncertainty from over/underestimating total hours

Question 18

Global method relies on …. is used when

Answer 18

Historical data

Is used to give initial estimates only

Question 19

Sources of error in global method (5)

Answer 19

Different definitions on cost included 
Different definitions on the measurement of units of capacity(eg height including ceiling or not)
Not comparing like with like
Inflation and interest rates
Market factors

Question 20

Factorial technique provides and is used for

Answer 20

A comprehensive list of potential costs

Is used for process plants etc where major item costs can be obtained from suppliers

Question 21

Advantages and disadvantage of factorial method

Answer 21

No detailed programme needed
Can identify implementation problems
Lead times for equipment delivered

Not reliable for site workers

Question 22

Unit rate technique involves

Answer 22

Using historical rates in the BOQ

Question 23

Operational method involves

Answer 23

Total cost found by considering constituent operations and activities using method statement and accumulated demand for resources

Question 24

Benefits of operational technique and requirements

Answer 24

Reliable
Uses current rates

Must use accurate data collection and risk identification
Must focus on high risk areas