CCM Construction Cost and Time Management 4 — Questions and Answers
Question 1: What does 'total float' represent in a CPM network schedule?
- The time an activity can be delayed without delaying the project completion (Correct answer)
- The time saved by fast-tracking activities
- The difference between early start and late finish of an activity
- The buffer time added to the project end date
Correct answer: The time an activity can be delayed without delaying the project completion
Total float is the amount of time an activity can be delayed beyond its early start date without delaying the overall project completion date.
Question 2: Which cost estimating technique uses a statistical relationship between historical data and project variables to calculate cost?
- Bottom-up estimating
- Analogous estimating
- Parametric estimating (Correct answer)
- Three-point estimating
Correct answer: Parametric estimating
Parametric estimating uses statistical models (e.g., cost per square foot, cost per unit) derived from historical data to calculate estimated costs for a project.
Question 3: A subcontractor's invoice includes $50,000 for stored materials not yet incorporated into the work. Per standard AIA payment application practices, the CM should:
- Approve payment only if materials are stored on-site and properly insured (Correct answer)
- Reject the payment request entirely as materials must be installed
- Approve payment automatically since subcontractor delivered them
- Defer payment to the final retainage release
Correct answer: Approve payment only if materials are stored on-site and properly insured
AIA documents allow payment for stored materials if they are stored on-site (or in an approved location), properly insured, and supported by a bill of sale or other documentation.
Question 4: In construction scheduling, 'resource leveling' is used primarily to:
- Shorten the project duration by overlapping activities
- Eliminate resource over-allocations by adjusting activity start times within float (Correct answer)
- Identify the critical path through the network
- Calculate the cost impact of schedule delays
Correct answer: Eliminate resource over-allocations by adjusting activity start times within float
Resource leveling adjusts activity start and finish dates within their available float to resolve resource over-allocations and create a smoother resource utilization profile.
Question 5: What is 'management reserve' in project cost management?
- Contingency included in individual activity estimates for known risks
- An amount set aside for unknown unknowns outside the project baseline (Correct answer)
- The contractor's profit margin built into the bid
- Funds reserved for change order negotiations
Correct answer: An amount set aside for unknown unknowns outside the project baseline
Management reserve is budget held outside the cost baseline for unknown-unknown risks; it requires formal authorization to access and is not part of the earned value baseline.
Question 6: When using the percentage-of-completion method for revenue recognition, a contractor has billed $1.2M on a $4M contract with $600K in costs incurred and a total estimated cost of $3M. What is the estimated gross profit to date?
- $200,000 (Correct answer)
- $300,000
- $600,000
- $400,000
Correct answer: $200,000
Percent complete = $600K/$3M = 20%; recognized revenue = 20% × $4M = $800K; gross profit to date = $800K − $600K = $200,000.
Question 7: Which scheduling output document shows activity sequence, durations, and calendar dates while visually displaying the project timeline in bar format?
- Network diagram
- Gantt chart (Correct answer)
- Resource histogram
- S-curve
Correct answer: Gantt chart
A Gantt chart (bar chart schedule) displays activities as horizontal bars against a calendar timeline, showing planned durations and sequence in an easy-to-read format.
CCM Construction Cost and Time Management 4
What does 'total float' represent in a CPM network schedule?