SOP - Cost Management Flashcards
What are the elements of the CM’s role in Cost Management?
- Create and implement a system to control cost, control cost growth
- Design Cost Management Plan (CMP), deliver within budget, provide financial forecast
- Manage project costs and cash flow, communication
Who has primary responsibility for controlling cost on the project?
- The CM
- The owner
- The contractor
- The designer
The CM
Which of the following is not a type of conceptual estimating?
- Analogous estimating (top down)
- Unit takeoff
- Parametric modeling
- Bottom-up estimating
Unit takeoff
What are some types of conceptual estimating methods?
- Analogous estimating (Top-down estimtating)
- Bottom-up estimating
- Parametric modeling
What is the acronym for defining a project by breaking down the project into all of its various work components and arranging them in a hierarchical structure?
- ABC
- WBS
- UBC
- IBC
WBS
What does a realistic budget contain?
- Consideration of the owner’s goals and objectives, reasonable procurement strategy, identified project constraints
- Consideration of the owner’s goals and objectives, generated cost that matches available financing, identified project constraints
Consideration of the owner’s goals and objectives, reasonable procurement strategy, identified project constraints
What does a realistic budget contain?
- Consideration of the owner’s goals and objectives
- Reasonable procurement strategy
- Identified project constraints
What does the typical “S” curve show?
- Cumulative expenditures
- Monthly expenditures
- Monthly cash flow
- Earned value
- Cumulative expenditures
What does the typical bell curve show?
- Cumulative expenditures
- Monthly expenditures
- Monthly cash flow
- Earned value
- Monthly expenditures
Cumulative expenditures are shown on a ________ curve
“S” curve
Monthly expenditures are shown on a ________ curve
bell curve
What is the formula for Schedule Variance?
- Earned Hours or $$ to date ÷ Budgeted Hours or $$ to date
- Earned Hours or $$ - Budgeted Hours or $$
- Earned Hours or $$ - Actual Hours or $$
- Earned Hours or $$ to date ÷ Actual Hours or $$ to date
Earned Hours or $$ - Budgeted Hours or $$
Schedule Variance formula = Earned minus _________
Budgeted
Cost Performance Index formula = Earned to date divided by _____
Actuals to date
What is the formula for the Cost Performance Index?
- Earned Hours or $$ to date ÷ Budgeted Hours or $$ to date
- Earned Hours or $$ - Budgeted Hours or $$
- Earned Hours or $$ to date ÷ Actual Hours or $$ to date
- Earned Hours or $$ - Actual Hours or $$
Earned Hours or $$ to date ÷ Actual Hours or $$ to date
What are the primary risks associated with cost estimating for the CM?
- Price changes and labor availability
- Design and scope changes
- Owner interprets CM’s estimate as a “warranty” and focus’s on a single number vs. range
- Legal liability
Owner interprets CM’s estimate as a “warranty” and focus’s on a single number vs. range
What is a solution to managing cost estimating risk for the CM?
- Transfer risk to other parties
- Continually manage expectations and establish a realistic contingency
- Ensure the designer is responsible for any estimates
- Develop a building information model
Continually manage expectations and establish a realistic contingency
What is the minimum information needed for a conceptual cost estimate?
- Project type
- Project size or capacity
- Project location
- Project schedule
The primary factors on which a CM should evaluate a bid are?
- Completeness and Responsiveness
- Technical / references
- Math errors and alternates
Which individual on the project/program team has primary responsibility for cost control throughout the project?
- The owner
- The contractor
- The designer
- The CM
The CM
What is the CM’s primary role in cost management during the construction phase?
- Ensuring the project remains on schedule
- Keeping everyone happy and on task
- An aggressive and timely resolution of change order issues
- Managing the contractors
An aggressive and timely resolution of change order issues
CM’s must take an _________ approach to resolving change order issues.
aggressive and timely
Cost monitoring involves these tasks:
- Report actual vs. planned costs
- Estimate cost at project completion
- Determine the need for cash flow based on planned vs. actual cash
- Track actual vs. planned performance
When managing cost, the CM must control the project _________________ and deliver the project within budget.
budget and cost growth
Cost management activities during the project’s close-out include:
- Release of liens
- Release of retainage
- Final cost accounting
- Final close-out report
Cost control starts during this project phase:
- Pre-Design
- Design
- Procurement
- Construction
Pre-Design
The Man-hour Analysis is:
A. A tool to determine if the contractor is behind or on schedule
B. Useful for change order and claim analysis concerning lost productivity and lost efficiency
C. A technique that compares a non-impacted portion of the project with the impacted portion
D. Both A and B
E. Both A and C
Both A and B
A _____________ analysis is a tool to determine if the contractor is behind or on schedule and useful for change order and claim analysis concerning lost productivity and lost efficiency:
T/F
When processing claims, the burden of proof is on the CM to substantiate entitlement and damages.
_____________ is defined as “The process of looking at the design and finding ways to maximize value for the client by delivering a design that meets the program…”
- Market analysis
- Value Analysis
- Design analysis
- Cost analysis
Value Analysis
Developing a cost management system involves these processes, EXCEPT:
- Identifying resources needed
- Estimating cost of resources
- Procuring resources and materials
- Allocating estimate costs
- Controlling changes that impact the accepted budget
Procuring resources and materials
Developing a cost management system involves these processes:
- Identifying resources needed
- Estimating cost of resources
- Allocating estimate costs
- Controlling changes that impact the accepted budget
These items are needed to develop a cash flow schedule, EXCEPT:
- Detailed estimate
- Cash flow analysis
- Conceptual project schedule
- Conceptual estimate
- Detailed estimate
Cost or price may vary with these types of procurement strategies:
A. Firm fixed price and unit price
B. Cost reimbursement and firm fixed price
C. Unit price and cost reimbursement
Unit price and cost reimbursement
Public entities usually provide _______ flexibility with procurement strategies
Less
The cash flow schedule allows the owner to predict when the project will need cash. To fund the project, the owner would typically need the most cash during this phase of the project:
A. Initial start of project
B. Design phase
C. Beginning of the Construction phase
D. Middle of the Construction phase
Middle of the Construction phase
A cost management system should:
track ______,
identify _______,
and help predict how decisions ________ the budget.
track costs,
identify variances,
decisions impact the budget
A ________________ system should track costs, identify variances, and help predict how decisions impact the budget.
cost management
What type of estimating is typically used for negotiating change orders or settling claims or disputes?
A. Quantity-based survey estimating
B. Range estimating
C. Feasibility estimating
D. Definitive estimating
Range estimating
What type of change order pricing is done after work has already been completed?
A. Forward pricing
B. Actual cost pricing
Actual cost pricing
___________ estimating is typically used for negotiating change orders or settling claims or disputes
Range estimating
What technique compares a non-impacted portion of the project with the impacted portion and also allows an “earned value analysis” to determine the productivity impacts of change orders?
A. Man-hour analysis
B. Measured mile
C. Value analysis
D. Market analysis
Measured mile technique
Select the two types of cost estimates.
A. Conceptual and Monumental
B. Monumental and Guaranteed
C. Detailed and Guaranteed
D. Detailed and Conceptual
Detailed and Conceptual
Construction cost is a ______ of the overall project cost.
subset
Project contingencies _________ as the project progresses from inception to completion.
decrease
The process of incorporating a balance change culture of recognition, planning, and evaluation of project changes in an organization to effectively manage project changes.
Change Management:
When a contract is bid and awarded on a lump sum basis, the CM must obtain a _______________ from the contractor
Schedule of Values
you should prudently set aside for a new construction project _____% of your contract award amount to deal with change orders
10% of your contract award amount
The average construction contingency is 5-10% but is recommended to be ______%
10 to 15%
For a renovation or modernization project, set aside ______% as a decent rule of thumb.
15%
AACEI refers to conceptual estimates as an “order of magnitude” and defines accuracy at +50% to -30%.
+50% to -30%
You ought to be able to predict the cost of construction on bid day, plus or minus __% of the actual bid amount
5%
