CRC Budgeting & Cost Estimation 3

Question 1

A residential contractor discovers that lumber prices have risen 18% since the original estimate was submitted three months ago. This type of cost variance is best categorized as:

Accepted Answer

Escalation risk

Answer

Escalation risk refers to price increases in materials or labor between the time an estimate is prepared and when work is performed.

Question 2

In a residential project schedule, the critical path method (CPM) most directly helps a contractor:

Accepted Answer

Identify activities that, if delayed, will extend the project completion date

Answer

CPM identifies the sequence of tasks with zero float, meaning any delay on these tasks directly delays project completion.

Question 3

What is the primary purpose of a cash flow projection in residential construction?

Accepted Answer

To determine when funds will be needed and when revenue will be received throughout the project

Answer

A cash flow projection shows the timing of expenses and income, helping the contractor manage working capital needs.

Question 4

A contractor uses the 'RSMeans' cost data reference. This resource is primarily used to:

Accepted Answer

Obtain national and regional unit cost benchmarks for materials and labor

Answer

RSMeans provides unit cost data adjusted by geographic location factors for accurate budget benchmarking.

Question 5

During a residential remodel, the homeowner requests three scope additions after contract signing. The contractor should handle these through:

Accepted Answer

Formal written change orders that adjust the contract price and schedule

Answer

Written change orders protect both parties by formally documenting scope changes, cost adjustments, and schedule impacts.

(CRC) Certified Residential Contractor Practice Test

(CRC) Certified Residential Contractor Practice Test

CRC Budgeting & Cost Estimation 3