CBC Financial Management & Estimating Flashcards

What is the purpose of a 'work-in-progress (WIP) schedule' in construction accounting?

Answer: Measuring over/under billing on active contracts

A WIP schedule compares earned revenue to billed amounts on each active contract to identify overbilling or underbilling positions.

Which estimating approach uses costs from similar past projects adjusted for current conditions?

Answer: Analogous (historical) estimating

Analogous estimating leverages historical data from comparable completed projects and adjusts for size, inflation, or site differences.

A 'cost-plus' contract compensates the contractor for:

Answer: Actual costs incurred plus an agreed fee or percentage

Under a cost-plus contract, the owner reimburses the contractor for all allowable project costs and pays an additional fee (fixed or percentage) as profit.

Florida contractors are required to keep project financial records for a minimum of how many years after project completion?

Answer: 3 years

Florida Statute §489.119 and related rules generally require contractors to retain financial and project records for at least 3 years after project completion.

What is 'earned value' in project financial management?

Answer: The budgeted cost of work actually performed to date

Earned value (EV) measures the budgeted amount for work completed to date, enabling comparison against actual costs and planned schedule.

Which term describes the difference between a project's actual cost and its earned value when actual cost exceeds earned value?

Answer: Cost variance (negative)

A negative cost variance (CV = EV − AC) indicates that the project has spent more than the value of work accomplished, signaling a cost overrun condition.