Cost Management Flashcards
6 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 6 Cost Management flashcards as text
Which document provides a detailed breakdown of estimated construction costs?
Answer: Cost estimate
A cost estimate is a detailed financial projection that breaks down all anticipated expenses for a construction project. It includes labor, materials, equipment, subcontractors, and overheads. This document is essential for budgeting, bidding, and financial planning throughout the project lifecycle.
What is the primary purpose of a cost baseline in construction management?
Answer: To establish performance measurements
A cost baseline is the approved version of the project budget, typically presented as a time-phased budget. Its primary purpose is to serve as a benchmark against which actual project costs are compared. This allows project managers to track cost performance, identify variances, and make informed decisions to keep the project within budget.
Which term describes the ongoing comparison between actual and planned cost performance?
Answer: Earned Value Management
Earned Value Management (EVM) is a project management methodology that integrates scope, schedule, and cost to assess project performance and progress. It systematically compares the planned value of work, the actual cost incurred, and the earned value of work completed. EVM provides objective metrics to track performance and forecast future project outcomes.
What is a contingency reserve used for in cost management?
Answer: To manage risk-related cost impacts
A contingency reserve is a specific amount of money included in a project budget to cover unforeseen costs that may arise from identified risks. These are 'known unknowns' – risks that have been identified but whose impact or occurrence is uncertain. It provides a buffer to manage potential cost overruns due to these risks, without impacting the project's baseline budget.
What tool helps visualize cost performance over time?
Answer: S-curve
An S-curve is a graphical representation that plots cumulative costs, labor hours, or other quantities against time. It typically starts slowly, rises steeply during the main execution phase, and then flattens out towards project completion, forming an 'S' shape. This tool helps visualize project progress, track cost performance, and forecast future trends.
Which project phase typically requires the most accurate cost estimates?
Answer: Execution
The execution phase of a construction project involves the actual building and implementation of the design. During this phase, resources are heavily utilized, and costs are incurred rapidly. Therefore, highly accurate cost estimates are crucial to manage cash flow, control expenses, and ensure the project remains within budget, as deviations can have significant financial implications.