CSLB Estimating, Bidding, and Cost Control 1 — Questions and Answers
Question 1: Which type of construction estimate is most accurate and is typically used for final bidding?
- Order of magnitude estimate
- Schematic estimate
- Design development estimate
- Detailed quantity takeoff estimate (Correct answer)
Correct answer: Detailed quantity takeoff estimate
A detailed quantity takeoff estimate — developed from final construction documents — is the most accurate estimate type and is used for final competitive bids.
Question 2: What is 'overhead' in a contractor's estimate?
- The cost of materials for the project
- Indirect costs of running the business not directly attributable to a single project (Correct answer)
- The contractor's profit margin
- Subcontractor markup
Correct answer: Indirect costs of running the business not directly attributable to a single project
Overhead includes indirect costs such as office rent, equipment depreciation, administrative salaries, and insurance — costs necessary to operate the business but not tied to a single project.
Question 3: A 'lump sum' (stipulated sum) contract means:
- The contractor is paid based on actual time and materials
- The contractor agrees to complete the scope for one fixed total price (Correct answer)
- The owner pays for materials separately
- Payment is made in equal monthly installments
Correct answer: The contractor agrees to complete the scope for one fixed total price
A lump sum contract requires the contractor to complete all specified work for a single fixed price, placing the risk of cost overruns on the contractor.
Question 4: In competitive bidding, a 'bid bond' serves to:
- Guarantee project completion
- Cover payment to subcontractors
- Ensure the bidder will enter into the contract at the bid price if awarded (Correct answer)
- Replace the performance bond during bidding
Correct answer: Ensure the bidder will enter into the contract at the bid price if awarded
A bid bond guarantees that if the bidder is awarded the project, they will execute the contract at the bid price — otherwise the surety pays the owner the difference.
Question 5: The term 'markup' in construction estimating refers to the percentage added to:
- Material costs only
- Labor costs only
- The total direct cost to cover overhead and profit (Correct answer)
- The subcontractor's bid only
Correct answer: The total direct cost to cover overhead and profit
Markup is the percentage added to total direct project costs (labor, materials, equipment, subs) to cover overhead and generate profit.
Question 6: What is a 'unit price' contract?
- A contract where the owner pays per square foot of completed space
- A contract where prices are set per unit of work, with final payment based on actual quantities (Correct answer)
- A contract limited to specialty trade work
- A contract capped at a maximum price
Correct answer: A contract where prices are set per unit of work, with final payment based on actual quantities
A unit price contract establishes prices for defined units of work (e.g., per cubic yard of concrete), and final payment is determined by multiplying those rates by actual measured quantities.
CSLB Estimating, Bidding, and Cost Control 1
Which type of construction estimate is most accurate and is typically used for final bidding?