CPC Construction Business Management & Finance Flashcards
6 cards from real CPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPC Construction Business Management & Finance flashcards as text
What is the 'break-even' point in a construction company's overhead analysis?
Answer: The annual revenue level at which total revenue equals total fixed and variable overhead costs
Break-even analysis identifies the revenue level at which the company covers all overhead costs, below which it operates at a loss even without direct cost overruns.
What is the purpose of a 'bid bond' submitted with a construction bid?
Answer: Guarantee that if awarded, the bidder will execute the contract and furnish required performance and payment bonds
A bid bond protects the owner from a low bidder who wins but refuses to execute the contract, requiring the surety to pay the difference between the low and next-lowest bid.
Which project delivery method allows the owner to hire a construction manager during design to provide cost estimating, constructability reviews, and then manage construction?
Answer: Construction Manager at Risk (CMAR)
In CMAR, the construction manager is selected early and provides preconstruction services, then guarantees a maximum price (GMP) and manages construction delivery.
What is 'Earned Value Management (EVM)' used for on construction projects?
Answer: Integrate scope, schedule, and cost to objectively measure project performance and forecast final outcomes
EVM compares Budgeted Cost of Work Performed (BCWP/Earned Value) against Planned Value and Actual Cost to quantify schedule and cost variances and forecast completion.
Under the Davis-Bacon Act, what requirement applies to federal construction contracts exceeding $2,000?
Answer: Workers must be paid at least the prevailing wage rates determined by the Department of Labor for the project locality
The Davis-Bacon Act requires contractors on covered federal construction projects to pay laborers and mechanics the locally prevailing wages and fringe benefits.
What is a 'lump-sum' (fixed-price) contract, and what risk does it transfer to the contractor?
Answer: A contract for a fixed total price; the contractor bears the risk of cost overruns beyond the agreed sum
In a lump-sum contract, the contractor agrees to perform defined scope for a fixed price, assuming the risk that actual costs could exceed the contract amount.