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CEP EXAM QUESTIONS AND ANSWERS
1- What is estimating?
A prediction or forecast of resources (Time, Cost and Materials) required to achieve or obtain an
agreed upon scope.
2- What is the role of a cost estimator?
- Predict cost of a project for a defined scope, to be completed at defined location and point if
time in future.
- Assists in economic evaluation of potential projects.
- Collect and analyze data.
3- What is budgeting?
A process used to allocate the estimated costs of resources into cost accounts against which
cost performance will be measured and assessed. Budgeting considers time-phase in relation to
a schedule and/or time based financial requirements and constraints.
4- What is quantification?
Activity to translate project scope information into resource quantities suitable for costing.
5- What are the different classes of estimate?
Class – 5 conceptual/screening – factored/parametric.
Class – 4 Study/Feasibility – equipment factored/parametric.
Class – 3 Budget/Authorizing/Control – semi detailed line items.
Class – 2 Control/Bid Tender – detailed unit costs/ forced take off
Class – 1 Check estimate – detailed take off
6- What is costing?
Costing is the application of cost and resources to a quantified scope.
7- What is pricing?
The determination of the amount of money asked in exchange for the item, it is applies after
costing and its determination takes in consideration; business and other considerations in
addition to inherent costs.
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8- What are the fundamental considerations for internalization?
Converting units from other measurement systems, calculate the effects of changes in currency
exchange rates and adjust labor productivity.
9- What is accuracy?
It is an indication of the degree to which the final cost outcome for a given project will vary from
the original estimate cost.
10- What is contingency?
It is an amount added to an estimate to allow for items, conditions or events for which the state
occurrence or effect is uncertain and that experience shows will likely result in additional costs.
11- What is parametric estimate?
Is the process of estimating cost by using mathematical equations that relate cost to one or
more physical variables associated with the item being estimated.
12- What is Cost Estimate Relationship (CER)?
It is an algorithm or formula that is used to perform the costing operation. CER’s relate (Cost,
Time, and Quantity) with quantity scope, execution strategies or other defining elements.
13- What are location factors?
An overall total project factor for translating the summation of all project cost elements from a
geographical location to another.
14- What are life cycle costs?
Consideration of all costs of a product, from concept, design, implementation, start up and
dismantling.
15- What are direct costs?
The costs related to completing work that are directly attributable to its performance and are
necessary for its completion. It includes the supervision directly involved in the physical
construction.
16- What are indirect costs?
The cost not directly attributable to the completion of an activity, typically allocated across all
activities on a predetermined basis.
17- What is Lang factor method?
It is a technique proposed by H. J. Lang. Lang suggested multiplying the cost of the equipment by
a factor (Lang Factor) to obtain total process plant cost.
Total plant Cost = Total equipment cost x Lang factor
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18- What is Hand factor method?
Hand factor method uses different factor for different types of equipment. Different from Lang
factor method when the cost of the equipment are multiplied by its factors we obtain the direct
field costs. Indirect field costs, home office costs and OSBL costs are excluded from the final
result.
Direct field Cost = Equipment cost x Hand factor
19- What is the difference of “composite rate” and “average crew rate”?
They are the same and consist in develop an average rate between crafts of different experiences
and wage rates.
20- What is burden?
It is the cost of maintaining an office with staff, other than operating personnel. Also includes
federal, state and local taxes, fringe benefits and other union contract obligations.
21- What is bare rate?
Bare labor rate is the gross direct wage paid to the workers.
22- What is unbalance estimate technique?
It is a technique used to allocate estimate costs to accounts whose definitions do not reflect the
nature of the cost being allocated. The objective is to achieve a desired business result, such
improve cash flow.
23- What are the estimate process steps?
Scoping
Quantification
Costing
Pricing
Conditioning
24- What KSA stands for?
Knowledge, skills and abilities.
25- What is cost category?
A division in a system of classification for estimated and expensed money for which cost are to be
summarized.
26- Why estimate classifications are important?
Because they assist all parties in gaining a mutual understanding of the basis of the estimate, as well as
the expected accuracy of the estimate.
CEP EXAM QUESTIONS AND ANSWERS
1- What is estimating?
A prediction or forecast of resources (Time, Cost and Materials) required to achieve or obtain an
agreed upon scope.
2- What is the role of a cost estimator?
- Predict cost of a project for a defined scope, to be completed at defined location and point if
time in future.
- Assists in economic evaluation of potential projects.
- Collect and analyze data.
3- What is budgeting?
A process used to allocate the estimated costs of resources into cost accounts against which
cost performance will be measured and assessed. Budgeting considers time-phase in relation to
a schedule and/or time based financial requirements and constraints.
4- What is quantification?
Activity to translate project scope information into resource quantities suitable for costing.
5- What are the different classes of estimate?
Class – 5 conceptual/screening – factored/parametric.
Class – 4 Study/Feasibility – equipment factored/parametric.
Class – 3 Budget/Authorizing/Control – semi detailed line items.
Class – 2 Control/Bid Tender – detailed unit costs/ forced take off
Class – 1 Check estimate – detailed take off
6- What is costing?
Costing is the application of cost and resources to a quantified scope.
7- What is pricing?
The determination of the amount of money asked in exchange for the item, it is applies after
costing and its determination takes in consideration; business and other considerations in
addition to inherent costs.
, www.estimatorstoolbox.com
8- What are the fundamental considerations for internalization?
Converting units from other measurement systems, calculate the effects of changes in currency
exchange rates and adjust labor productivity.
9- What is accuracy?
It is an indication of the degree to which the final cost outcome for a given project will vary from
the original estimate cost.
10- What is contingency?
It is an amount added to an estimate to allow for items, conditions or events for which the state
occurrence or effect is uncertain and that experience shows will likely result in additional costs.
11- What is parametric estimate?
Is the process of estimating cost by using mathematical equations that relate cost to one or
more physical variables associated with the item being estimated.
12- What is Cost Estimate Relationship (CER)?
It is an algorithm or formula that is used to perform the costing operation. CER’s relate (Cost,
Time, and Quantity) with quantity scope, execution strategies or other defining elements.
13- What are location factors?
An overall total project factor for translating the summation of all project cost elements from a
geographical location to another.
14- What are life cycle costs?
Consideration of all costs of a product, from concept, design, implementation, start up and
dismantling.
15- What are direct costs?
The costs related to completing work that are directly attributable to its performance and are
necessary for its completion. It includes the supervision directly involved in the physical
construction.
16- What are indirect costs?
The cost not directly attributable to the completion of an activity, typically allocated across all
activities on a predetermined basis.
17- What is Lang factor method?
It is a technique proposed by H. J. Lang. Lang suggested multiplying the cost of the equipment by
a factor (Lang Factor) to obtain total process plant cost.
Total plant Cost = Total equipment cost x Lang factor
, www.estimatorstoolbox.com
18- What is Hand factor method?
Hand factor method uses different factor for different types of equipment. Different from Lang
factor method when the cost of the equipment are multiplied by its factors we obtain the direct
field costs. Indirect field costs, home office costs and OSBL costs are excluded from the final
result.
Direct field Cost = Equipment cost x Hand factor
19- What is the difference of “composite rate” and “average crew rate”?
They are the same and consist in develop an average rate between crafts of different experiences
and wage rates.
20- What is burden?
It is the cost of maintaining an office with staff, other than operating personnel. Also includes
federal, state and local taxes, fringe benefits and other union contract obligations.
21- What is bare rate?
Bare labor rate is the gross direct wage paid to the workers.
22- What is unbalance estimate technique?
It is a technique used to allocate estimate costs to accounts whose definitions do not reflect the
nature of the cost being allocated. The objective is to achieve a desired business result, such
improve cash flow.
23- What are the estimate process steps?
Scoping
Quantification
Costing
Pricing
Conditioning
24- What KSA stands for?
Knowledge, skills and abilities.
25- What is cost category?
A division in a system of classification for estimated and expensed money for which cost are to be
summarized.
26- Why estimate classifications are important?
Because they assist all parties in gaining a mutual understanding of the basis of the estimate, as well as
the expected accuracy of the estimate.
