General Contractor License Planning and Estimating 2 — Questions and Answers
Question 1: What does the term 'contingency allowance' mean in a construction estimate?
- A fixed markup for contractor profit
- A reserve fund for unforeseen costs during the project (Correct answer)
- The cost of temporary site facilities
- An allowance for subcontractor delays
Correct answer: A reserve fund for unforeseen costs during the project
A contingency allowance is a percentage-based reserve added to an estimate to cover unforeseen or uncertain costs.
Question 2: Which scheduling method uses arrows to represent activities and nodes to represent events?
- Critical Path Method (CPM)
- Precedence Diagramming Method (PDM)
- Arrow Diagramming Method (ADM) (Correct answer)
- Gantt chart method
Correct answer: Arrow Diagramming Method (ADM)
The Arrow Diagramming Method (ADM) uses arrows for activities and circles (nodes) for start/end events.
Question 3: What is the purpose of a quantity takeoff in estimating?
- To calculate contractor overhead
- To measure and list all materials and work items from the plans (Correct answer)
- To determine the project schedule duration
- To identify subcontractors for bidding
Correct answer: To measure and list all materials and work items from the plans
A quantity takeoff (QTO) involves systematically measuring all materials and work items from drawings to form the basis of an estimate.
Question 4: A project's direct costs are $800,000 and overhead is 12%. What is the total cost before profit?
- $812,000
- $896,000 (Correct answer)
- $888,000
- $860,000
Correct answer: $896,000
$800,000 × 1.12 = $896,000 total cost before profit.
Question 5: Which document defines the full scope of work that a contractor must perform on a project?
- Bid bond
- Notice to proceed
- Scope of work / specifications (Correct answer)
- Change order log
Correct answer: Scope of work / specifications
The scope of work, typically detailed in the specifications and contract documents, defines exactly what the contractor is required to perform.
Question 6: What is 'float' (or slack) in a project schedule?
- Extra budget allocated to subcontractors
- The amount of time an activity can be delayed without delaying the project completion (Correct answer)
- The time between Notice to Proceed and mobilization
- Overtime hours approved by the owner
Correct answer: The amount of time an activity can be delayed without delaying the project completion
Float is the amount of time a non-critical activity can be delayed without affecting the overall project end date.
Question 7: When calculating labor costs in an estimate, which factor accounts for payroll taxes and benefits?
- Profit margin
- Burden rate (Correct answer)
- General conditions
- Mark-up rate
Correct answer: Burden rate
The burden rate (labor burden) is the percentage added to base wages to cover payroll taxes, insurance, and benefits.
General Contractor License Planning and Estimating 2
What does the term 'contingency allowance' mean in a construction estimate?