Construction Management Cost Estimating & Financial Management 2

Question 1

Earned Value Management (EVM) calculates Schedule Performance Index (SPI) as:

Accepted Answer

Earned Value ÷ Planned Value (EV/PV)

Answer

SPI = EV/PV; a value below 1.0 indicates the project is behind schedule relative to the planned baseline.

Question 2

In Earned Value Management, a Cost Performance Index (CPI) of 0.85 means:

Accepted Answer

For every $1 spent, only $0.85 of budgeted work is accomplished

Answer

CPI = EV/AC; a CPI of 0.85 signals the project is over budget — $1.18 is being spent for every $1.00 of budgeted work completed.

Question 3

A construction project's contingency budget is best described as:

Accepted Answer

A reserve for identified and unidentified risks within the project scope

Answer

Contingency is a planned reserve within the project budget to cover cost growth from known risks and unforeseen scope uncertainties, not for profit or scope changes.

Question 4

The term 'cost-to-complete' (CTC) in project financial management refers to:

Accepted Answer

The estimated cost needed to finish the remaining work

Answer

Cost-to-complete is a forward-looking forecast of expenses required to finish all remaining project activities, used to update the Estimate at Completion (EAC).

Question 5

Which document does a contractor typically submit monthly to request payment for completed work?

Accepted Answer

Application for payment (pay application)

Answer

A monthly application for payment, referencing the Schedule of Values, is the standard mechanism for contractors to formally request compensation for work completed.

Construction Management Practice Test

Construction Management Practice Test

Construction Management Cost Estimating & Financial Management 2