CRC Cost Estimation & Budgeting 2 — Questions and Answers
Question 1: A contractor uses the 'square foot method' for a preliminary cost estimate. What is the PRIMARY limitation of this approach?
- It cannot be used for residential projects
- It ignores local labor and material cost variations (Correct answer)
- It requires completed architectural drawings
- It overestimates material waste factors
Correct answer: It ignores local labor and material cost variations
The square foot method uses average costs that may not reflect local market conditions for labor and materials.
Question 2: When preparing a bid, a contractor determines that subcontractor quotes represent 60% of total project cost. If subcontractor costs increase 10%, what is the overall project cost increase?
- 10%
- 6% (Correct answer)
- 4%
- 60%
Correct answer: 6%
A 10% increase on 60% of costs equals 6% total project cost increase (0.10 × 0.60 = 0.06).
Question 3: A homeowner requests a change order to upgrade flooring after the contract is signed. The contractor should price this change order based on:
- Original contract unit prices only
- Current market prices at time of change order (Correct answer)
- A fixed percentage markup regardless of costs
- The lowest competing subcontractor bid
Correct answer: Current market prices at time of change order
Change orders should reflect current market prices since material and labor costs may have changed since the original bid.
Question 4: Which contingency percentage is most commonly used in residential construction budgets for unforeseen conditions?
- 1-2%
- 5-10% (Correct answer)
- 15-20%
- 25-30%
Correct answer: 5-10%
A 5-10% contingency is standard in residential construction to cover unforeseen conditions and minor scope changes.
Question 5: An estimator calculates that a roofing job requires 2,400 sq ft of shingles. Accounting for a 10% waste factor, how many squares should be ordered?
- 24 squares
- 26.4 squares (Correct answer)
- 22 squares
- 28 squares
Correct answer: 26.4 squares
2,400 sq ft ÷ 100 = 24 squares, plus 10% waste = 24 × 1.10 = 26.4 squares.
Question 6: What does the term 'value engineering' mean in the context of residential cost estimation?
- Reducing quality to lower costs
- Finding alternative methods or materials that maintain function while reducing cost (Correct answer)
- Increasing project scope to add value
- Estimating the resale value of the completed home
Correct answer: Finding alternative methods or materials that maintain function while reducing cost
Value engineering identifies cost-saving alternatives that preserve the intended function and quality of the project.
Question 7: A contractor's bid includes $150,000 in direct costs. If overhead is 12% and profit is 8%, what is the total bid price?
- $177,000
- $180,000 (Correct answer)
- $183,000
- $186,000
Correct answer: $180,000
Overhead = $150,000 × 0.12 = $18,000; Profit = $150,000 × 0.08 = $12,000; Total = $150,000 + $18,000 + $12,000 = $180,000.
CRC Cost Estimation & Budgeting 2
A contractor uses the 'square foot method' for a preliminary cost estimate.
What is the PRIMARY limitation of this approach?