CCT CCT Value Engineering & Cost Optimization 2 — Questions and Answers
Question 1: What is the 'cost-worth' relationship in value engineering?
- The ratio of labor costs to material costs
- The comparison of actual cost to the minimum cost necessary to reliably perform a function (Correct answer)
- The relationship between overhead and profit
- The ratio of bid price to estimate
Correct answer: The comparison of actual cost to the minimum cost necessary to reliably perform a function
In VE, cost-worth analysis compares what something costs versus the least it could cost to perform the same function, identifying potential savings.
Question 2: Which of the following is a key output of a value engineering workshop?
- A finalized construction schedule
- A list of alternatives with estimated cost savings and functional equivalency assessments (Correct answer)
- A revised contractor payment schedule
- An updated subcontractor list
Correct answer: A list of alternatives with estimated cost savings and functional equivalency assessments
A VE workshop produces documented alternatives that maintain or improve function at lower cost, along with quantified estimates of potential savings for owner review.
Question 3: In cost optimization, what does 'value analysis' applied to materials typically involve?
- Selecting the most expensive material available
- Substituting specified materials with functionally equivalent but lower-cost alternatives (Correct answer)
- Using only locally sourced materials
- Eliminating all material allowances from the estimate
Correct answer: Substituting specified materials with functionally equivalent but lower-cost alternatives
Value analysis of materials identifies substitutions that meet functional and performance requirements at a lower cost, such as an alternative structural system or finish material.
Question 4: What is the purpose of a 'cost model' in value engineering?
- To replace the project schedule
- To display the distribution of costs by system or element to identify high-cost areas for VE focus (Correct answer)
- To calculate contractor overhead rates
- To document change order history
Correct answer: To display the distribution of costs by system or element to identify high-cost areas for VE focus
A cost model breaks the project into systems (structural, mechanical, electrical, etc.) and shows each system's cost share, directing VE effort toward the highest-cost elements.
Question 5: Which concept describes reducing the total cost of a project by compressing the schedule to avoid prolonged overhead and carrying costs?
- Cost-duration tradeoff (crashing) (Correct answer)
- Life-cycle costing
- Bid leveling
- Value stream mapping
Correct answer: Cost-duration tradeoff (crashing)
Schedule crashing trades increased direct costs (overtime, added resources) for reduced duration, which can lower total project cost when indirect/overhead savings exceed the acceleration premium.
Question 6: A cost technician identifies that a specified mechanical system costs 40% more than a functionally equivalent alternative. This finding is best documented as:
- A punch list item
- A value engineering proposal for owner review (Correct answer)
- A contract claim
- A request for information (RFI)
Correct answer: A value engineering proposal for owner review
A cost difference of this magnitude with functional equivalency is exactly what a VE proposal is designed to capture, allowing the owner to evaluate and potentially approve the change.
CCT CCT Value Engineering & Cost Optimization 2
What is the 'cost-worth' relationship in value engineering?