CCS Cost Estimation 3 — Questions and Answers
Question 1: A specifier notices that a bid price for structural steel is 18% below the average of other bids. The BEST immediate action is to:
- Investigate whether the bidder omitted scope or used incorrect material grades before recommending award (Correct answer)
- Award the contract immediately to capture the savings
- Reject the bid automatically as unbalanced
- Request all other bidders to rebid at the lower price
Correct answer: Investigate whether the bidder omitted scope or used incorrect material grades before recommending award
An unusually low bid may signal omitted scope, arithmetic error, or use of non-compliant materials, all of which require investigation before award recommendation.
Question 2: In cost estimating, 'indirect costs' typically include:
- Supervision, temporary facilities, insurance, bonds, and general conditions (Correct answer)
- Concrete formwork, reinforcing steel, and finish carpentry
- Owner's furniture and equipment
- Architectural and engineering fees only
Correct answer: Supervision, temporary facilities, insurance, bonds, and general conditions
Indirect costs (general conditions) cover project overhead items like supervision, site trailers, temporary utilities, and insurance rather than installed work.
Question 3: Which estimating technique involves breaking a project into individual components, quantifying each, and pricing each line item separately?
- Detailed quantity takeoff (bottom-up estimate) (Correct answer)
- Analogous estimating
- Parametric modeling
- Top-down budgeting
Correct answer: Detailed quantity takeoff (bottom-up estimate)
A bottom-up estimate developed from a detailed quantity takeoff provides the highest accuracy by pricing every measured component individually.
Question 4: The RS Means cost data 'city cost index' is used to:
- Adjust national average unit costs to reflect local labor and material conditions (Correct answer)
- Convert metric measurements to imperial units
- Calculate sales tax on construction materials by state
- Escalate historical costs from past projects to current year dollars only
Correct answer: Adjust national average unit costs to reflect local labor and material conditions
City cost indexes factor local wage rates, material pricing, and market conditions into RS Means national averages to produce location-specific cost estimates.
Question 5: A 'guaranteed maximum price' (GMP) contract shifts which risk compared to a lump-sum contract?
- The owner retains savings if actual costs fall below the GMP, and the contractor bears cost overruns above the GMP (Correct answer)
- The owner bears all cost risk regardless of project outcome
- The contractor keeps all savings regardless of final cost
- The GMP eliminates the need for contingency budgets entirely
Correct answer: The owner retains savings if actual costs fall below the GMP, and the contractor bears cost overruns above the GMP
Under a GMP, the contractor is at risk for costs exceeding the ceiling while any savings below it are typically shared or returned to the owner per contract terms.
Question 6: Which cost category is classified as a 'soft cost' in construction project budgeting?
- Architectural and engineering fees (Correct answer)
- Structural steel erection
- Concrete foundations
- Roofing and waterproofing
Correct answer: Architectural and engineering fees
Soft costs are non-construction expenses such as design fees, permits, legal costs, and financing charges, as opposed to hard costs tied to physical construction.
Question 7: When preparing a cost estimate, escalation should be applied from which reference point to the midpoint of construction?
- The date the estimate is prepared (Correct answer)
- The date of owner's project conception
- The date of contractor selection
- The date the certificate of occupancy is issued
Correct answer: The date the estimate is prepared
Escalation is calculated from the estimate date to the midpoint of the construction period, when the bulk of procurement and installation expenditures occur.
CCS Cost Estimation 3
A specifier notices that a bid price for structural steel is 18% below the average of other bids.
The BEST immediate action is to: