Supporting Skills and Knowledge

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