CBP CBP Estimating & Cost Control 2 — Questions and Answers
Question 1: Earned Value Management (EVM) uses which three core metrics to assess project cost and schedule performance?
- PV, EV, and AC (Correct answer)
- ROI, NPV, and IRR
- BAC, EAC, and VAC
- CPI, SPI, and TCPI
Correct answer: PV, EV, and AC
EVM is based on Planned Value (PV), Earned Value (EV), and Actual Cost (AC) to measure project performance against baseline.
Question 2: A Cost Performance Index (CPI) of 0.85 means a project is:
- 5% under budget
- 15% over budget (Correct answer)
- 15% under budget
- Within budget tolerance
Correct answer: 15% over budget
A CPI below 1.0 indicates the project is over budget; CPI = 0.85 means only $0.85 of value is earned for every $1.00 spent, signaling a 15% cost overrun.
Question 3: Which type of cost estimating is typically the LEAST accurate?
- Definitive estimate
- Design development estimate
- Schematic design estimate
- Order-of-magnitude estimate (Correct answer)
Correct answer: Order-of-magnitude estimate
An order-of-magnitude estimate (also called a ballpark estimate) is prepared with minimal project information and typically has an accuracy range of -25% to +75%.
Question 4: In construction cost accounting, 'direct costs' refer to:
- Office rent and insurance premiums
- Taxes and bonding fees
- Labor, materials, and equipment used on a specific project (Correct answer)
- Administrative salaries
Correct answer: Labor, materials, and equipment used on a specific project
Direct costs are expenses that can be directly attributed to a specific project, including labor, materials, and equipment used on that job.
Question 5: Which procurement method is MOST likely to result in the lowest initial bid price but highest risk of change orders?
- Cost-plus-fee contract
- Lump-sum hard bid (Correct answer)
- Guaranteed maximum price
- Construction management at-risk
Correct answer: Lump-sum hard bid
Lump-sum hard bids encourage contractors to bid competitively low but may lead to more change orders if the scope is not thoroughly defined.
Question 6: Retainage in a construction contract is best described as:
- A penalty for late project completion
- A percentage of each payment withheld until project completion (Correct answer)
- The contractor's profit margin held in escrow
- Insurance required by the owner
Correct answer: A percentage of each payment withheld until project completion
Retainage is a portion (typically 5–10%) withheld from each progress payment to ensure the contractor completes all work satisfactorily.
CBP CBP Estimating & Cost Control 2
Earned Value Management (EVM) uses which three core metrics to assess project cost and schedule performance?