Healthcare Construction Cost Estimating & Budget Management Flashcards

A healthcare facility's total project budget includes a line item for 'Owner's Project Manager fees.' This cost is best categorized as:

Answer: Soft cost

Owner's Project Manager fees are professional services costs and are classified as soft costs, along with other design, legal, permitting, and administrative expenses.

When total construction costs for a healthcare project significantly exceed the approved budget, the FIRST step the project manager should take is:

Answer: Perform a thorough cost analysis to identify root causes of the overrun

Before taking corrective action, the project manager must analyze the causes of the cost overrun to develop informed, targeted solutions that address the underlying issues.

Which procurement method is most commonly used for complex healthcare construction projects requiring early contractor involvement and a Guaranteed Maximum Price?

Answer: Construction Manager at Risk (CMaR)

CMaR is widely used in healthcare because it allows early contractor involvement during design for phasing and cost input, while the contractor commits to a GMP before construction begins.

In preparing a healthcare facility cost estimate, 'parametric estimating' uses:

Answer: Statistical relationships between historical data and measurable project variables

Parametric estimating uses statistical models and historical cost data to calculate estimates based on measurable parameters such as cost per square foot or cost per bed, enabling rapid early-phase estimates.

A 'bid bond' in healthcare construction procurement serves what primary purpose?

Answer: Provides financial assurance that the contractor will honor the submitted bid price if selected

A bid bond is a surety instrument that guarantees the bidder will enter into the contract at the submitted bid price if selected; failure to do so obligates the surety to cover the resulting loss to the owner.

At what intervals should formal cost reconciliation be conducted on a healthcare construction project?

Answer: At regular intervals throughout the project lifecycle

Regular cost reconciliation throughout the project lifecycle allows the team to identify budget variances early and implement corrective actions before minor discrepancies escalate into major overruns.

When a healthcare construction project is described as having a 'budget variance,' this means:

Answer: There is a measurable difference between the budgeted and actual costs

A budget variance is the quantified difference between what was planned (budgeted) and what was actually spent or committed, indicating either a cost overrun or a cost savings.