Cost and Schedule
Estimating, budgeting, and scheduling together
Cost and schedule are one system. Candidates must know estimate classifications, contingency and escalation treatment, and critical path method (CPM) scheduling fundamentals.
Estimates mature through classes: order-of-magnitude or parametric early (wide range), then budget, then definitive or construction documents (narrow range). Each class has a different expected accuracy; the trap is presenting a Class 5 estimate with the precision of a Class 3. Escalation must be applied to the midpoint of construction, not to bid date. Contingency should be explicit, risk-based, and drawn down as risk retires.
CPM essentials
- Critical path is the longest path; float is the time an activity can slip without delaying completion.
- Total float is shared along a path; consuming it affects all activities on that path.
- Near-critical paths matter; a small delay can shift the critical path.
- Time extensions require delay analysis: contemporaneous, time impact, or windows analysis.
Traps
- Adding float to every activity and calling it a buffer; that masks the true critical path.
- Comparing bid packages with different escalation and contingency assumptions.
- Confusing a schedule update with a schedule revision; revisions change logic and need justification.
- Treating liquidated damages as a cure-all; they rarely cover owner losses and may be unenforceable if a penalty.
Worked rule of thumb
Use a 10-15% design contingency at schematic design, tapering to 3-5% at construction documents, plus a separate escalation line. On schedule, keep owner float separate from contractor float; owner float is for owner decisions and should not be shown to the contractor as available time. Rule: if the critical path has zero float, any owner delay is a time extension.
Owner Organization
Designing the owner's side of the table
The CM must understand how the owner is organized to make decisions: governance, roles, delegation of authority, and the project management office (PMO).
A clear project governance structure defines who approves scope, budget, schedule, and changes, and at what thresholds. The trap is an unclear decision authority: the CM spends months collecting approvals because no one knows who can sign. Establish a delegation-of-authority matrix and a decision log at kickoff.
Roles and interfaces
- Project sponsor: executive owner of the business case and escalation point.
- Project manager or CM: day-to-day delivery and reporting.
- Owner's finance, legal, operations, and IT: functional reviewers with defined turnaround times.
- PMO: standards, templates, portfolio reporting; not usually a decision-maker on individual projects.
Traps
- Confusing the sponsor's accountability with the CM's responsibility; accountability stays with the owner.
- Assuming the PMO approves changes; it standardizes, it does not own project decisions.
- Ignoring the owner's own staffing capacity; a lean owner team becomes the bottleneck.
- Overlooking interface agreements with tenants, utilities, and regulators.
Worked rule of thumb
Map every recurring decision (design approval, change order, pay application) to a named role and a dollar threshold. If a decision has no named owner, it will stall. A useful test: for any approval, ask who signs, what they need to see, and how long they have. If any answer is missing, fix the governance before mobilizing the team.
Ethics and Collaboration
Integrity under pressure
The CM acts as the owner's trusted advisor, which creates fiduciary-style duties: loyalty, disclosure of conflicts, confidentiality, and honest reporting. Candidates must recognize conflicts of interest, improper gifts, confidential information, and pressure to misreport.
A conflict of interest exists when a personal or financial interest could impair objectivity, or even appear to. The duty is to disclose promptly and recuse where needed. Traps include believing disclosure is unnecessary if the interest is small, accepting vendor hospitality that creates obligation, and using a prior employer's pricing data.
Collaboration and the CM's role
Collaboration is not softness. It means early involvement of builders and designers, transparent sharing of cost and risk information, and structured issue resolution. But collaboration never overrides the duty to report bad news accurately. A CM who shades a forecast to keep the team happy has failed ethically, not collaborated.
Traps in questions
- Choosing the "nice" answer that conceals a problem; the ethical answer usually involves disclosure and documentation.
- Assuming a conflict is cured by informing only one party; disclose to all affected parties.
- Treating confidentiality as ending at project closeout; obligations often survive.
- Confusing advocacy for the owner with misrepresenting facts to a contractor.
Worked rule of thumb
When facing an ethical dilemma, apply three tests: Would I be comfortable if this decision were published? Does it comply with law, contract, and my professional code? Who is harmed and have I disclosed it? If any answer is uncomfortable, escalate in writing. Document the disclosure and the decision. The record protects the owner and the CM.