Practice Test Geeks(CCM) Certified Construction Manager Practice Test
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Cost Management Flashcards

7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Cost Management flashcards as text

  1. A project has a Budget at Completion (BAC) of $500,000, an Earned Value (EV) of $200,000, and Actual Cost (AC) of $250,000. What is the Cost Performance Index (CPI)?

    Answer: 0.80

    CPI = EV / AC = $200,000 / $250,000 = 0.80, indicating the project is over budget.

  2. Which cost estimating technique uses historical data from similar past projects to develop a high-level estimate for a new project?

    Answer: Analogous estimating

    Analogous estimating leverages historical data from comparable projects to produce a quick, high-level cost estimate.

  3. What does the term 'contingency reserve' refer to in construction cost management?

    Answer: Funds allocated to cover identified risks with known probabilities

    Contingency reserves address identified risks (known unknowns) and are included within the project cost baseline.

  4. In a Guaranteed Maximum Price (GMP) contract, who bears the risk if actual construction costs exceed the GMP?

    Answer: The contractor

    Under a GMP contract, the contractor absorbs costs above the guaranteed maximum price, protecting the owner from cost overruns.

  5. A construction manager uses a cost-loaded schedule to track project finances. What is the primary benefit of this approach?

    Answer: It allows earned value analysis by linking costs directly to schedule activities

    A cost-loaded schedule integrates cost and schedule data, enabling earned value management (EVM) to measure performance.

  6. Which of the following best describes 'life cycle costing' in construction project management?

    Answer: Evaluating total costs of ownership from design through demolition

    Life cycle costing considers all costs — design, construction, operations, maintenance, and disposal — over a facility's entire lifespan.

  7. On a construction project, what is the purpose of a Schedule of Values (SOV)?

    Answer: To allocate the contract sum among work items for progress billing

    The Schedule of Values breaks the contract sum into work items or cost categories, forming the basis for monthly pay applications.