Construction Cost Estimating and Control Flashcards

Job cost accounting in construction differs from standard accounting because it tracks costs:

Answer: By individual project and work activity rather than by time period alone

Job cost accounting captures all costs attributable to specific projects and work items, enabling project-level profitability analysis.

The purpose of a bid bond in the construction bidding process is to:

Answer: Guarantee that the low bidder will enter into the contract and provide required bonds

A bid bond protects the owner from a bidder who wins but refuses to sign the contract, covering the difference between the low bid and the next acceptable bid.

Life-cycle cost analysis in construction evaluates:

Answer: Total cost of ownership including initial construction, operation, maintenance, and eventual replacement

Life-cycle cost analysis considers all costs over a building's entire lifespan, often favoring higher first-cost options that save money in operation and maintenance.

Preliminary budget estimates prepared during the schematic design phase are typically based on:

Answer: Gross area multiplied by historical cost-per-square-foot benchmarks for similar project types

At schematic design, limited detail forces estimators to rely on area-based parametric benchmarks rather than detailed quantity takeoffs.

Which pricing strategy in construction bidding involves adding a fixed percentage markup to all direct costs?

Answer: Cost-plus-percentage markup

Cost-plus-percentage pricing adds a set percentage over actual costs for overhead and profit, though it may reduce incentive for cost efficiency.

In construction purchasing, the phrase 'buy-out' refers to:

Answer: Awarding subcontracts and material purchases after the main contract is signed

Buy-out is the process of negotiating and awarding all subcontracts and major material orders to lock in actual costs after the GC is under contract.