L3 Flashcards
Adjustment Factors
WHY ARE 98% OF MEGAPROJECTS
OVER BUDGET BY AT LEAST 30%?
3 FACTORS
involve
- complex planning,
- unexpected challenges, and
- large-scale operations that are difficult to predict accurately, leading to higher costs than initially estimated.
3 ADJUSTMENT FACTORS
LOCATION: Costs vary depending on location
TIME: Historical costs must be adjusted for inflation
SIZE: Larger projects will have lower square foot costs
Why Time is needed for Adjustment Factors when adjusting?
Bc Historical costs must be adjusted for inflation
T OR F? Larger projects will have lower square foot costs
T
WHAT ARE 3 COSTS THAT ARE DECREASED WHEN IT COMES TO SIZE FACTOR ?
M.L.F
Material costs:
Labour costs:
Fixed costs:
Costs shown in an estimation guide are
called ____ COSTS
BASE COSTS
Why do different locations have
different construction costs? 7 factors
Different locations have varying construction costs due to factors like
- labor rates
- Material prices
- Regulations
- Land values
- Infrastructure quality
- Economic conditions
- Environmental factors.
___________ provides adjustment for the TIME FACTOR
HISTORICAL COST INDEX
GIVE 3 EXAMPLES IN RELATION TO TIME FOR COMPARING COSTS FOR:
years& city
- Different years in same city.
- Different years in different cities.
- Different cities in same year.
WHY DO WE ROUND OFF?
To avoid false precision.
Concept applies to many fields, not just estimation.
