Business, Estimating, and Project Management
Business questions test the numbers and process behind a project. Know estimating methods: unit cost (cost per square foot, per plant, per linear foot), assembly/crew-based estimating, and historical data. Understand the components of a bid: direct costs (labor, materials, equipment, subcontractors), indirect/overhead, contingency, and profit/markup. Traps include confusing markup with margin, forgetting overhead, and omitting sales tax or permits.
Margin vs. markup is a classic trap. Markup is added to cost; margin is profit as a percentage of price. If cost is $100 and you want a 20% margin, price = cost ÷ (1 − 0.20) = $125, not $120 (which is a 20% markup giving a 16.7% margin). Know how to compute labor hours from productivity rates, and that change orders, retainage, and payment schedules affect cash flow.
Project management: know the phases (preconstruction, mobilization, construction, closeout/punch list, warranty), scheduling (critical path, sequencing, weather days), and contract types (lump sum, time and materials, cost-plus). Understand scope, submittals, RFIs, and documentation as risk controls. Traps: ignoring lead times for plant and hardscape materials, and underestimating site access and disposal costs.
Worked example: a 2,000 sq ft paver patio at $18/sq ft installed = $36,000 direct cost. Add 10% overhead ($3,600) = $39,600. To achieve a 15% margin, price = $39,600 ÷ 0.85 ≈ $46,588.
Review the difference between profit and cash flow, and why retainage and slow pay can sink an otherwise profitable job. Questions often test the formula, not the narrative.