CIA Construction Cost Estimating & Building Materials

Question 1

What does 'replacement cost' mean in the context of insurance appraisal?

Accepted Answer

The cost to rebuild the structure with materials of like kind and quality at current prices

Answer

The market value of the property at the time of loss

Answer

The depreciated value of the original structure

Answer

The cost to purchase a comparable property in the same area

Question 2

Which cost estimation method calculates construction costs based on the building's square footage multiplied by a cost-per-unit figure derived from comparable structures?

Accepted Answer

Comparative unit method

Answer

Unit-in-place method

Answer

Quantity survey method

Answer

Segregated cost method

Question 3

In construction cost estimating, what do 'soft costs' refer to?

Accepted Answer

Non-construction expenses such as architectural fees, permits, and financing costs

Answer

Costs for easily replaceable materials like drywall and insulation

Answer

Labor costs for skilled tradespeople

Answer

Costs for landscaping and exterior improvements

Question 4

What is the primary purpose of a Marshall & Swift (CoreLogic) cost estimating system in insurance appraisal?

Accepted Answer

To provide standardized construction cost data for calculating replacement cost values

Answer

To assess environmental contamination costs on commercial properties

Answer

To calculate depreciation schedules for tax purposes

Answer

To determine land value in real estate transactions

Question 5

Which factor most significantly causes local construction costs to differ from national average benchmarks?

Accepted Answer

Local labor market conditions and material availability

Answer

The age of the building being appraised

Answer

The number of floors in the structure

Answer

The insurance carrier's preferred contractor list

Question 6

In construction cost estimating, what is a 'location factor' or 'cost multiplier'?

Accepted Answer

An adjustment factor that accounts for regional variations in construction costs

Answer

A percentage added to account for contractor profit and overhead

Answer

A multiplier applied to increase coverage limits over time for inflation

Answer

A factor used to calculate depreciation on individual building components

Question 7

What does 'functional obsolescence' mean in building cost assessment?

Accepted Answer

Loss in value due to outdated design, layout, or features that reduce the building's utility

Answer

Physical deterioration of structural components due to age and wear

Answer

Depreciation caused by external economic or neighborhood factors

Answer

The cost to update mechanical systems to current building code requirements