CCM Construction Cost and Time Management 3 — Questions and Answers
Question 1: A project has a contract value of $10M, with $6M of work complete but only $5M earned. The actual cost to date is $5.5M. What is the project's current status?
- Over budget and behind schedule (Correct answer)
- Under budget and ahead of schedule
- Over budget and ahead of schedule
- Under budget and behind schedule
Correct answer: Over budget and behind schedule
SV = EV−PV = $5M−$6M = −$1M (behind schedule); CV = EV−AC = $5M−$5.5M = −$0.5M (over budget), confirming both negative variances.
Question 2: Which contract type places the MOST financial risk on the owner for cost overruns?
- Lump sum / fixed price
- Cost-plus-fixed-fee (Correct answer)
- Guaranteed maximum price (GMP)
- Unit price
Correct answer: Cost-plus-fixed-fee
A cost-plus-fixed-fee contract reimburses all allowable costs incurred plus a fixed fee, placing essentially all cost risk on the owner with no contractor incentive to control costs.
Question 3: What is the primary purpose of a project cost baseline?
- To define the maximum budget approved by the owner
- To serve as the time-phased budget used to measure and monitor cost performance (Correct answer)
- To establish the contractor's profit margin
- To calculate the contingency reserve needed
Correct answer: To serve as the time-phased budget used to measure and monitor cost performance
The cost baseline is the approved, time-phased budget (excluding management reserves) used as a benchmark to measure, monitor, and control project cost performance.
Question 4: In precedence diagramming, which relationship type requires a predecessor activity to finish before the successor can start?
- Start-to-Start (SS)
- Finish-to-Finish (FF)
- Finish-to-Start (FS) (Correct answer)
- Start-to-Finish (SF)
Correct answer: Finish-to-Start (FS)
A Finish-to-Start (FS) relationship is the most common dependency, requiring the predecessor to be completely finished before the successor activity can begin.
Question 5: A CM discovers that the critical path has changed mid-project due to a delay in a previously non-critical activity. This is an example of:
- Float consumption leading to a new critical path (Correct answer)
- Resource leveling impact
- Fast-tracking results
- Baseline re-planning
Correct answer: Float consumption leading to a new critical path
When float on a non-critical activity is fully consumed due to delays, that activity becomes critical and may establish a new critical path through the network.
Question 6: Which quantity takeoff method calculates excavation volume using average end areas between cross-sections?
- Prismoidal formula
- Average end area method (Correct answer)
- Grid method
- Contour area method
Correct answer: Average end area method
The average end area method calculates earthwork volume by averaging the cross-sectional areas at two stations and multiplying by the distance between them.
Question 7: A project's Estimate at Completion (EAC) using the formula EAC = BAC/CPI indicates the project will finish significantly over budget. Which action is MOST appropriate for the CM?
- Ignore it because EAC is just a forecast
- Issue a formal variance report and develop a recovery plan (Correct answer)
- Immediately terminate the contract
- Reduce project scope to meet the budget
Correct answer: Issue a formal variance report and develop a recovery plan
A significant EAC overrun requires the CM to formally report the variance and develop a corrective action/recovery plan to bring the project back under control.
CCM Construction Cost and Time Management 3
A project has a contract value of $10M, with $6M of work complete but only $5M earned.
The actual cost to date is $5.5M.
What is the project's current status?