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CPC Certified Professional Constructor study materials
CPC Certified Professional Constructor study resources

CPC Certified Professional Constructor: Cost Management and Estimating: Price Build-Up and Earned Value Control

CPC Certified Professional Constructor · Work through your exam, one topic at a time.

All guide sections

Cost Management and Estimating: Price Build-Up and Earned Value Control

Cost Management and Estimating tests both the build-up of a price and the control of cost after award. Expect quantity takeoff, labor and equipment pricing, indirect costs, contingency, markups, cash flow, and earned value.

Estimating build-up

  • Take off quantities from drawings and specifications, then apply waste and conversion factors. Net quantities are not order quantities.
  • Labor cost = labor hours x wage rate x burden. Burden covers payroll taxes, insurance, and benefits; it is not overhead.
  • Equipment cost may be ownership plus operating, or a rental rate. Include mobilization and standby.
  • Direct cost includes labor, material, equipment, and subcontract. Indirect cost includes supervision, temporary facilities, permits, insurance, and bonds.
  • Contingency is an allowance for known unknowns; markup adds overhead and profit. Do not hide contingency inside a unit price.
  • Pricing methods include unit-price, assembly, parametric, and historical cost. Each depends on reliable productivity data.

Control and earned value

  • Compare actual cost with committed cost and budget, and forecast the cost to complete.
  • EV = budgeted value of work performed; PV = budgeted value of work scheduled; AC = actual cost.
  • CV = EV - AC; SV = EV - PV; CPI = EV/AC; SPI = EV/PV. EAC = BAC/CPI when the current cost trend continues; ETC = EAC - AC; VAC = BAC - EAC.

Worked example

BAC = $1,200,000; PV = $500,000; EV = $450,000; AC = $480,000. CV = $450,000 - $480,000 = -$30,000, so the project is over budget on completed work. SV = $450,000 - $500,000 = -$50,000, so it is behind schedule. CPI = 450/480 = 0.9375; SPI = 450/500 = 0.90. If the trend continues, EAC = $1,200,000 / 0.9375 = $1,280,000; ETC = $1,280,000 - $480,000 = $800,000; VAC = $1,200,000 - $1,280,000 = -$80,000.

Traps

Double-counting material in a subcontract price; omitting burden or sales tax; confusing contingency with markup; using the bid price as actual cost; reversing CPI and SPI; and assuming EAC is simply BAC plus the current overrun. A negative CV is over budget, not under.