GCC Cost Estimation & Budgeting 2 — Questions and Answers
Question 1: Which estimating method uses historical cost data from similar completed projects to forecast costs for a new project?
- Parametric estimating
- Analogous estimating (Correct answer)
- Bottom-up estimating
- Three-point estimating
Correct answer: Analogous estimating
Analogous estimating relies on actual costs from past similar projects as a basis for estimating the current project.
Question 2: A contractor estimates a project using the formula: Cost = Unit Rate × Quantity. This is an example of:
- Lump-sum estimating
- Parametric estimating (Correct answer)
- Analogous estimating
- Expert judgment estimating
Correct answer: Parametric estimating
Parametric estimating applies a statistical relationship between variables (unit rate and quantity) to calculate cost.
Question 3: What does a Schedule of Values (SOV) primarily serve in a construction contract?
- Sets the contractor's profit margin
- Allocates contract sum across work items for progress billing (Correct answer)
- Documents subcontractor bid amounts
- Lists material lead times
Correct answer: Allocates contract sum across work items for progress billing
An SOV breaks the contract sum into line items tied to work activities, forming the basis for progress payment applications.
Question 4: When calculating the cost per square foot for a commercial building, which cost category is LEAST likely included in the direct cost?
- Concrete formwork labor
- Structural steel material
- Home office overhead allocation (Correct answer)
- Mechanical rough-in materials
Correct answer: Home office overhead allocation
Home office overhead is an indirect cost applied as a percentage markup, not a direct field cost tied to specific work.
Question 5: In a unit price contract, the owner bears the primary risk when:
- Labor productivity is lower than estimated
- Final quantities differ significantly from bid quantities (Correct answer)
- The contractor's markup is too low
- Subcontractor prices increase after award
Correct answer: Final quantities differ significantly from bid quantities
Under unit price contracts the owner pays for actual quantities; quantity overruns increase the owner's total cost.
Question 6: Which ASTM standard classification level requires an estimate accuracy range of -15% to +20%?
- Class 5
- Class 4
- Class 3 (Correct answer)
- Class 2
Correct answer: Class 3
AACE Class 3 estimates (budget/authorization) have a typical accuracy range of -10% to -20% low and +10% to +30% high, often cited as ±15-20%.
Question 7: A contractor applies a 10% contingency to a $500,000 base estimate. What is the total estimated project cost?
- $505,000
- $510,000
- $550,000 (Correct answer)
- $600,000
Correct answer: $550,000
10% of $500,000 = $50,000; adding to the base gives $550,000.
GCC Cost Estimation & Budgeting 2
Which estimating method uses historical cost data from similar completed projects to forecast costs for a new project?