CCT Cost Estimation & Budgeting 5

Question 1

When preparing a cash flow forecast, which component represents the timing difference between when costs are incurred and when payments are made?

Accepted Answer

Payment lag

Answer

Payment lag is the delay between incurring a cost and actually disbursing payment, which affects the timing of cash outflows.

Question 2

A definitive estimate for a construction project typically has an accuracy range of:

Accepted Answer

-5% to +10%

Answer

A definitive (Class 1) estimate is the most accurate, prepared from complete design documents, with a typical accuracy of -5% to +10%.

Question 3

What is the difference between 'cost of work' and 'value of work done' in progress measurement?

Accepted Answer

Cost of work is actual expenditure; value of work done is the budgeted cost of completed work

Answer

Cost of work (actual cost) measures what was spent, while value of work done (earned value) measures the budgeted cost of physically completed work.

Question 4

Which cost estimating technique is best suited when a new project is similar to a previously completed project but with known differences in scope or size?

Accepted Answer

Analogous estimating with adjustments

Answer

Analogous estimating with adjustments uses historical data from a similar project and modifies it to account for known differences.

Question 5

In project budgeting, 'management reserve' differs from 'contingency reserve' primarily because:

Accepted Answer

Management reserve is for unknown unknowns; contingency reserve is for known unknowns

Answer

Management reserve covers unforeseeable events (unknown unknowns), while contingency reserve covers identified risks (known unknowns) that may or may not occur.

(CCT) Certified Cost Technician Practice Test

(CCT) Certified Cost Technician Practice Test

CCT Cost Estimation & Budgeting 5