CEP Cost Estimation Techniques & Methods 4

Question 1

Which of the following best describes the 'learning curve' effect in cost estimating?

Accepted Answer

Unit costs decrease by a constant percentage each time cumulative output doubles

Answer

The learning curve (or experience curve) quantifies the reduction in labor hours per unit as cumulative production doubles, typically expressed as an 80–90% curve.

Question 2

Direct costs in a construction estimate typically include which of the following?

Accepted Answer

Labor, material, and equipment costs directly attributable to the work

Answer

Direct costs are those that can be traced specifically to construction activities — primarily labor, materials, and equipment.

Question 3

A 'factor estimating' method applies percentage factors to which base cost?

Accepted Answer

A major purchased equipment or installed equipment cost

Answer

Factor estimating (e.g., Lang factor, Hand factor) multiplies purchased or installed equipment cost by empirically derived factors to estimate total facility cost.

Question 4

What is the key difference between a 'fixed-price' and a 'cost-reimbursable' contract from an estimating risk perspective?

Accepted Answer

Fixed-price transfers cost risk to the contractor; cost-reimbursable retains risk with the owner

Answer

Under a fixed-price contract, the contractor absorbs cost overruns, so the estimate becomes a risk management tool; under cost-reimbursable, the owner pays actual costs.

Question 5

Which statistical technique is most commonly used to validate a parametric CER by measuring how well the equation fits historical data?

Accepted Answer

Coefficient of determination (R²)

Answer

R² measures the proportion of variance in cost explained by the CER's independent variable(s); an R² close to 1.0 indicates a strong fit.

(CEP) Certified Estimating Professional Practice Test

(CEP) Certified Estimating Professional Practice Test

CEP Cost Estimation Techniques & Methods 4