CPE Construction Equipment Costs & Management

Question 1

Which of the following is classified as an equipment OWNERSHIP cost rather than an operating cost?

Accepted Answer

Depreciation

Answer

Fuel consumption

Answer

Tire replacement

Answer

Routine lubrication

Question 2

Equipment standby costs in estimating typically include:

Accepted Answer

Ownership costs plus a partial allowance for operating costs

Answer

Full ownership and operating costs identical to active use

Answer

Only insurance and storage costs

Answer

Operating costs only, since ownership costs are fixed

Question 3

The straight-line depreciation method calculates annual depreciation by:

Accepted Answer

Dividing cost minus salvage value by the useful life in years

Answer

Multiplying the cost by a fixed declining percentage each year

Answer

Using IRS-specified percentages based on asset class

Answer

Doubling the straight-line rate applied to book value

Question 4

The 'economic life' of construction equipment is best defined as:

Accepted Answer

The period during which it is most cost-effective to own and operate the equipment

Answer

The period over which equipment is fully depreciated for tax purposes

Answer

The manufacturer's rated service life in operating hours

Answer

The time until major overhaul costs exceed 50% of replacement value

Question 5

Which reference publication is most widely used by estimators to obtain construction equipment rental rates and depreciation schedules for cost claims?

Accepted Answer

EquipmentWatch (formerly Dataquest Blue Book)

Answer

RSMeans Building Construction Cost Data

Answer

Caterpillar Performance Handbook

Answer

ASPE Reference Estimating Manual

Question 6

When calculating total equipment cost per hour, which of the following components is part of the OPERATING cost category?

Accepted Answer

Fuel and lubricant consumption

Answer

Interest on capital investment

Answer

Property taxes and licensing fees

Answer

Storage and insurance costs

Question 7

Section 179 of the IRS tax code is significant in equipment cost planning because it allows construction firms to:

Accepted Answer

Immediately expense the full purchase cost of qualifying equipment in the year of purchase

Answer

Defer all equipment depreciation to future profitable tax years

Answer

Transfer unused depreciation deductions between subsidiaries

Answer

Extend the depreciation period for equipment used on government contracts