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PQSC Quantity Surveyor Registration study materials
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PQSC Quantity Surveyor Registration practice questions

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Question 1Construction and infrastructure economics

In a building contract, which cost category is treated as a preliminary (preliminaries) item rather than measured work in the bills of quantities?

  1. Site supervision and temporary site offices Correct answer.
  2. Reinforced concrete to ground-floor slab
  3. Ceramic wall tiling to toilets
  4. Structural steel roof framing

Explanation

Preliminaries cover site-wide management and temporary facilities that support the works but are not part of the permanent measured construction. Supervisory staff and temporary accommodation are classic preliminary items, whereas concrete, tiling and steel are measured permanent work.

Question 2Construction and infrastructure economics

A contractor's tender is built up using a 10% addition for overheads and profit applied to the total of measured works. What is this build-up method called?

  1. Operational estimating
  2. Unit-rate analysis
  3. Straight assessment of rates
  4. Percentage-on-cost method Correct answer.

Explanation

Adding a single percentage to cover head-office overheads and profit on top of the net cost of the works is the percentage-on-cost (or percentage addition) build-up. It contrasts with analysing every unit rate individually.

Question 3Construction and infrastructure economics

Which statement best describes the purpose of a bill of quantities in competitive tendering?

  1. It fixes the final contract sum regardless of design changes
  2. It records the contractor's actual site costs after completion
  3. It replaces the need for drawings during construction
  4. It provides a common measured schedule so tenders can be compared on the same basis Correct answer.

Explanation

A bill of quantities gives all tenderers the same measured description of the works, so priced tenders can be compared item by item on an equal basis. It does not fix the final sum where variations occur, nor does it substitute for drawings.

Question 4Construction and infrastructure economics

In the standard grouping of building costs, which item belongs to the substructure element rather than the superstructure?

  1. Pad foundations Correct answer.
  2. First-floor beams
  3. Roof coverings
  4. Ground-floor slab

Explanation

Substructure covers work below the lowest floor level, including foundations and excavation. Pad foundations sit in this zone, while slabs, upper beams and roof coverings are superstructure elements.

Question 5Construction and infrastructure economics

A quantity surveyor needs a quick early-stage cost estimate for a proposed warehouse with no design detail. Which approach is most appropriate?

  1. Applying a cost per square metre of floor area from comparable buildings Correct answer.
  2. Measuring every trade item on site
  3. Obtaining fixed quotations for all materials
  4. Preparing a full bill of quantities from detailed drawings

Explanation

At the earliest stage, before design information exists, area-based or unit-cost comparisons with similar buildings provide a realistic indicative estimate. Detailed measurement and quotations require developed design and are not feasible yet.

Question 6Construction and infrastructure economics

Which of the following is a direct cost to a contractor on a construction project?

  1. Annual professional indemnity insurance
  2. Head-office rent
  3. Company directors' salaries
  4. Wages of operatives installing blockwork Correct answer.

Explanation

Direct costs arise specifically from executing the works, such as trade labour, materials and plant used on site. Head-office rent, directors' salaries and company-wide insurance are indirect or overhead costs recovered across projects.

Question 7Construction and infrastructure economics

What does value engineering primarily aim to achieve on a construction project?

  1. Reducing cost while maintaining or improving the required function and performance Correct answer.
  2. Increasing the contract sum to improve contractor margin
  3. Shortening the defects liability period
  4. Transferring all design risk to the contractor

Explanation

Value engineering systematically reviews design and construction choices to deliver the required function at lower whole cost, without sacrificing performance. It is not about inflating price or shifting risk.

Question 8Construction and infrastructure economics

Which document typically sets out the measured quantities and descriptions of work that a contractor prices to form part of a lump-sum tender?

  1. Interim payment certificate
  2. Programme of works
  3. Bill of quantities Correct answer.
  4. Practical completion certificate

Explanation

The bill of quantities contains measured descriptions and quantities that the contractor prices, and those priced rates form part of the tender. Payment certificates, programmes and completion certificates serve different administrative purposes.

Question 9Construction and infrastructure economics

A contractor prices excavation at a rate assuming 8 cubic metres per gang-day, but site records show only 6 cubic metres per gang-day are achieved. What is the most likely cost consequence?

  1. The rate falls because plant costs are spread over more work
  2. The excavation rate will be lower than expected because output fell
  3. The rate is unaffected because output does not influence unit rates
  4. The excavation rate will be higher than expected because more gang-days are needed Correct answer.

Explanation

A unit rate is built from output assumptions; if actual output per gang-day is lower, more labour and plant time are consumed for the same quantity, raising the effective rate. Lower output increases cost per unit, not reduces it.

Question 10Construction and infrastructure economics

Using the elemental cost-planning method, a project's gross floor area is 2,500 m2 and the target cost is 7,500,000. What is the elemental cost per square metre of gross floor area?

  1. 2,500 per m2
  2. 3,750 per m2
  3. 3,000 per m2 Correct answer.
  4. 1,875 per m2

Explanation

Cost per square metre is total cost divided by gross floor area: 7,500,000 divided by 2,500 equals 3,000 per m2. This single-figure rate is then used for early comparison and benchmarking.

Question 11Construction and infrastructure economics

A contract has a measured works total of 400,000, preliminaries of 40,000 and a contingency allowance of 25,000. Which figure represents the base estimate before contingency is added?

  1. 425,000
  2. 400,000
  3. 465,000
  4. 440,000 Correct answer.

Explanation

The base estimate of measured works plus preliminaries is 400,000 plus 40,000, giving 440,000. Contingency is a separate risk allowance added on top to reach the overall budget figure.

Question 12Construction and infrastructure economics

In a re-measurement (approximate quantities) contract, how is the contract sum finally determined?

  1. It equals the lowest tender received without adjustment
  2. It is fixed at tender and never adjusted for quantity changes
  3. It is the tender sum adjusted to reflect the actual measured quantities at the stated rates Correct answer.
  4. It is agreed as a round-sum figure after completion regardless of measurement

Explanation

Under a re-measurement contract the tender is based on approximate quantities, and the final sum is the remeasured actual quantities valued at the tendered rates. This differs from a true lump-sum arrangement where quantities are not remeasured.

Question 13Construction and infrastructure economics

A client wants price certainty before construction begins and a fully designed project. Which procurement approach best matches this objective?

  1. Traditional lump-sum with full design before tender Correct answer.
  2. Cost-reimbursable open-book contract
  3. Design and build with novated design
  4. Construction management with early works packages

Explanation

A traditional lump-sum tender on complete design gives the client a firm price before work starts, maximising cost certainty at award. Construction management, design and build and cost-reimbursable routes introduce greater price flexibility or transfer timing differences.

Question 14Construction and infrastructure economics

Which cost is best classified as an indirect (overhead) cost in a contractor's tender build-up?

  1. Concrete supplied for the foundations
  2. Bricks delivered to the site for a wall
  3. Hire of a tower crane for the project duration
  4. Head-office estimating department salaries Correct answer.

Explanation

Indirect costs are those not attributable to a specific measured item but necessary to run the business, such as head-office estimating staff, recovered through overhead additions. Bricks, concrete and project crane hire are direct costs of executing the works.

Question 15Construction and infrastructure economics

A bill item describes 'excavate trenches for strip foundations, depth exceeding 2 m but not exceeding 4 m'. Why do bills of quantities state depth ranges for excavation?

  1. Because deeper trenches require no earthwork support
  2. To allow the contractor to choose the foundation depth freely
  3. To satisfy planning permission conditions
  4. Because excavation cost per cubic metre rises with depth due to support and handling Correct answer.

Explanation

Excavation cost per unit volume increases with depth because of additional earthwork support, lifting and disposal effort, so bills state depth bands to price each range fairly. The bands reflect construction economics, not design freedom or planning.

Question 16Construction and infrastructure economics

What is the main economic purpose of a retention in a construction contract?

  1. To provide the client with security for remedying defects after completion Correct answer.
  2. To pay interest to the contractor during the works
  3. To fund the contractor's head-office overheads
  4. To replace the need for performance security

Explanation

Retention withholds a percentage of certified sums to give the client funds to remedy defects that appear after completion or during the defects period. It is security, not working capital for overheads, and does not replace a performance bond.

Question 17Construction and infrastructure economics

A project has a budget of 2,000,000 and a risk allowance of 5% included within that budget. If identified risks are later assessed at 60,000, what is the contingency position relative to the allowance?

  1. Allowance exceeds assessed risk by 40,000 Correct answer.
  2. Allowance equals assessed risk exactly
  3. Allowance exceeds assessed risk by 100,000
  4. Assessed risk exceeds allowance by 60,000

Explanation

The risk allowance is 5% of 2,000,000, which is 100,000. Assessed risk of 60,000 is therefore 40,000 below the allowance, leaving headroom within the budget.

Question 18Construction and infrastructure economics

Which statement correctly describes the relationship between preliminaries and measured work in cost planning?

  1. Preliminaries vary with project duration and site conditions, so time-related items dominate Correct answer.
  2. Preliminaries reduce as measured work increases in value
  3. Preliminaries are usually a fixed percentage of measured work regardless of project duration
  4. Preliminaries are always excluded from the contract sum

Explanation

Many preliminaries, such as site staff, scaffolding and temporary facilities, are time-related and depend on programme duration and site conditions. They are not a fixed percentage of measured work and do form part of the contract sum.

Question 19Construction and infrastructure economics

A contractor's tender shows a total rate for a concrete item of 120 per cubic metre, made up of material 70, labour 30 and plant 20. If material prices rise by 10% before the rate is fixed, what is the revised rate per cubic metre?

  1. 132
  2. 127 Correct answer.
  3. 130
  4. 120

Explanation

A 10% rise on the material component of 70 adds 7, giving a revised rate of 127 per cubic metre. Labour and plant components are unchanged in this calculation.

Question 20Construction and infrastructure economics

Why is a bill of quantities said to reduce the contractor's financial risk compared with tendering on drawings and specification alone?

  1. It gives all tenderers the same measured basis, reducing the risk of misinterpreting scope Correct answer.
  2. It removes the need to price labour and plant
  3. It guarantees the quantities are accurate and cannot change
  4. It fixes material prices for the contract duration

Explanation

A common measured schedule reduces the risk that tenderers interpret scope differently, making prices more comparable and lowering the chance of costly misjudgement. It does not guarantee quantity accuracy or fix material prices.

Question 21Construction and infrastructure economics

A client is comparing two schemes. Scheme A costs 1,200,000 to build with annual maintenance of 30,000; Scheme B costs 1,000,000 with annual maintenance of 60,000. Over a 20-year horizon ignoring discounting, which has the lower total whole-life cost?

  1. Scheme A at 1,230,000
  2. Scheme A at 1,800,000 Correct answer.
  3. Scheme B at 1,600,000
  4. Scheme B at 2,200,000

Explanation

Scheme A totals 1,200,000 plus 20 years of 30,000 maintenance (600,000), giving 1,800,000. Scheme B totals 1,000,000 plus 1,200,000 maintenance, giving 2,200,000, so Scheme A is lower over the horizon.

Question 22Construction and infrastructure economics

A contract provides for fluctuations (price adjustment) using a formula with indices for labour and materials. What is the main economic effect of this provision compared with a fixed-price contract?

  1. It transfers all inflation risk to the contractor
  2. It guarantees the contract sum will fall if indices drop below the base date
  3. It shares inflation risk between client and contractor according to the index movement Correct answer.
  4. It removes the need for any contingency in the tender

Explanation

A fluctuations clause adjusts the contract sum for measured index movements, so inflation risk is shared rather than carried wholly by the contractor. Tenderers can then reduce their inflation contingency, but the sum may rise or fall with indices.

Question 23Construction and infrastructure economics

In a target-cost contract with a 50/50 pain-gain share and a target cost of 5,000,000, the actual cost proves to be 4,600,000. What is the contractor's gain share and the resulting payment above actual cost?

  1. Gain share 400,000; payment 5,000,000
  2. Gain share 200,000; payment 4,800,000 Correct answer.
  3. Gain share 100,000; payment 4,700,000
  4. Gain share 0; payment 4,600,000

Explanation

The saving against target is 400,000, shared 50/50, giving the contractor a 200,000 gain share. Payment is actual cost of 4,600,000 plus the 200,000 share, totalling 4,800,000.

Question 24Construction and infrastructure economics

A quantity surveyor is benchmarking a proposed office building and finds comparable projects range from 2,200 to 2,900 per m2, with the proposed scheme having above-average specification and a constrained city-centre site. Where should the estimate sit and why?

  1. Exactly at the midpoint regardless of specification and site
  2. At or above the upper bound, because higher specification and constrained sites raise cost Correct answer.
  3. At the lower bound, because city-centre sites reduce construction cost
  4. Below the range, because benchmarks always overstate current costs

Explanation

Above-average specification and constrained city-centre sites both push cost upward through higher-quality finishes and restricted access, storage and working space. A prudent estimate therefore sits at or above the top of the comparable range.

Question 25Construction and infrastructure economics

Under a cost-plus-percentage-fee arrangement, the contractor is reimbursed actual cost plus a fixed percentage. Why does this create a weaker cost-incentive than a target-cost contract?

  1. The fee is capped, so the contractor cannot recover any cost increase
  2. The fee falls as actual cost rises, rewarding the contractor for spending more
  3. The fee rises with actual cost, so the contractor gains from higher expenditure Correct answer.
  4. The fee is fixed, so the contractor bears all overspend

Explanation

With a percentage fee, the contractor's remuneration increases as reimbursable cost increases, so there is little incentive to control expenditure. Target-cost sharing reverses this by rewarding savings and penalising overspend.

Question 26Construction and infrastructure economics

A quantity surveyor is preparing an early cost estimate for a new distribution warehouse. Which cost per unit of accommodation is the standard basis for an order-of-magnitude check at feasibility stage?

  1. Cost per drawing issued
  2. Cost per unit of site labour hours
  3. Cost per contractor tender enquiry
  4. Cost per square metre of gross floor area Correct answer.

Explanation

At feasibility stage, benchmark rates are normally expressed per unit of gross floor area because area data is quick to obtain and comparable across similar building types. Labour hours, drawing counts and enquiry numbers do not relate directly to the size or value of the finished asset.

Question 27Construction and infrastructure economics

During a tender review, a contractor's rate for a reinforced concrete slab is found to be well below the cost of materials alone. What is the most likely commercial explanation?

  1. The contractor has front-loaded a different item and reduced this one Correct answer.
  2. The contractor has loaded the rate to improve cash flow
  3. The contractor has made an arithmetic error in extending the bill
  4. The contractor expects to recover the shortfall through a later variation

Explanation

Where one rate is abnormally low, tenderers often reduce it to keep the total competitive while loading other earlier or higher-quantity items. This balancing keeps the overall tender sum attractive while shifting recovery to items where the contractor expects better return. It is a deliberate pricing strategy rather than an error.

Question 28Construction and infrastructure economics

A client asks the quantity surveyor to advise on the whole-life cost of two cladding options. Which cost should be included in the whole-life comparison but is often omitted from a capital cost estimate?

  1. The building regulation application fee
  2. The replacement of the cladding at the end of its service life Correct answer.
  3. The professional fees for the original design
  4. The contractor's site preliminaries

Explanation

Whole-life costing adds operating, maintenance and end-of-life replacement costs to the initial capital cost. Periodic replacement of a short-life component such as cladding is a classic whole-life item that a capital estimate ignores. Preliminaries, design fees and application fees are all incurred once at the outset.

Question 29Construction and infrastructure economics

A bill of quantities includes a provisional sum for specialist ground treatment because the ground conditions are not yet fully known. How should the contractor treat this sum in the tender?

  1. Omit it entirely because it is not measured work
  2. Include it only if the contractor intends to carry out the work
  3. Add a percentage for overheads and profit to the sum
  4. Add it to the tender total as instructed, without adding profit or attendance Correct answer.

Explanation

A provisional sum is included in the contract sum as an allowance to be expended on the employer's instruction, and the contractor normally adds no markup to the sum itself. Any attendance or profit on nominated work is priced separately where the bill requires it. The sum is therefore carried forward at face value.

Question 30Construction and infrastructure economics

A quantity surveyor is asked to explain why a contractor's cash flow forecast differs from its profit forecast on the same project. Which factor best explains the difference?

  1. Profit being calculated before tax while cash flow is after tax
  2. The contractor's head office overhead allocation method
  3. Retention deducted from interim payments and released later Correct answer.
  4. The interest rate charged on the contractor's overdraft

Explanation

Cash flow tracks the timing of money actually received, whereas profit is recognised as work is executed. Retention held back from each interim certificate delays cash receipt without reducing profit, so the two forecasts diverge. The other factors affect the amount or timing only indirectly.

Question 31Construction and infrastructure economics

A contract is let on a lump sum basis with a bill of quantities. During construction, a measured quantity proves greater than stated in the bill. Which statement reflects the usual position?

  1. The employer may deduct the difference from the contract sum
  2. The contractor must complete the work at no extra cost
  3. The contractor bears the cost of the extra quantity as a pricing risk
  4. The quantity is re-measured and the contract sum adjusted Correct answer.

Explanation

Even under a lump sum contract with a bill of quantities, a re-measurement provision commonly applies where quantities prove inaccurate, and the contract sum is adjusted accordingly. The employer effectively carries the risk of quantity error. The contractor does not absorb the difference unless the contract expressly says so.

Question 32Construction and infrastructure economics

A contractor is preparing a tender and must decide how to price an item where the quantity in the bill is likely to increase substantially. Which pricing approach best protects the contractor's commercial position?

  1. Price the item at the same rate as similar items regardless of quantity
  2. Price the item at a high rate to recover extra cost if quantities rise
  3. Price the item at a rate reflecting the expected higher quantity Correct answer.
  4. Price the item at a low rate and recover the shortfall elsewhere

Explanation

When quantities are expected to rise, a contractor can price the item at the rate appropriate to the larger quantity, which may be lower per unit due to economies of scale. Pricing high on an increasing item exposes the contractor to a lower evaluation and possible challenge. The rate should reflect the anticipated actual quantity.

Question 33Construction and infrastructure economics

Which cost item is most appropriately classified as a preliminary and general item rather than measured work in a bill of quantities?

  1. Site supervision and temporary site accommodation Correct answer.
  2. Excavation for foundations to a stated depth
  3. Reinforcement to columns measured by weight
  4. Painting to internal walls measured by area

Explanation

Preliminaries cover site-wide, time-related costs such as supervision, temporary accommodation and site management that cannot be attributed to a measured unit. Excavation, reinforcement and painting are all measured work priced by quantity. This distinction matters because preliminaries are often assessed separately in cost comparison.

Question 34Construction and infrastructure economics

A client is deciding between a traditional lump sum contract and a design-and-build contract for a project where the brief is well developed but the client wants a single point of responsibility. Which procurement route best meets the client's stated priority?

  1. A cost-plus contract with an open book arrangement
  2. Traditional lump sum with a separate design team
  3. Design and build with a single contractor responsible for design and construction Correct answer.
  4. Construction management with multiple trade contracts

Explanation

Design and build places both design and construction responsibility with one contractor, giving the client a single point of accountability. The traditional route separates design from construction, construction management splits responsibility across trades, and cost-plus does not provide a single point of design responsibility.

Question 35Construction and infrastructure economics

A contractor's tender includes an item for 'provisional quantities' of rock excavation. What is the commercial purpose of pricing such an item?

  1. To allow payment for rock actually encountered, measured on site Correct answer.
  2. To transfer all rock risk to the contractor
  3. To enable the employer to claim a discount if no rock is found
  4. To fix the quantity of rock excavation for the whole contract

Explanation

Provisional quantities are an estimate of work that may or may not occur, and payment is made for the quantity actually measured. This shares the risk of unforeseen ground conditions between the parties. It does not fix the quantity or transfer all risk to the contractor.

Question 36Construction and infrastructure economics

A quantity surveyor is assessing the financial effect of a one-week delay caused by the employer. Which cost is most clearly recoverable as a direct consequence of the delay?

  1. Time-related site preliminaries such as supervision and scaffolding hire Correct answer.
  2. The cost of the contractor's tender preparation
  3. The contractor's head office rent for the year
  4. The contractor's annual insurance premium

Explanation

Delay costs recoverable from the employer are those directly caused by the delay, typically time-related preliminaries such as extended supervision, plant hire and site accommodation. Head office rent, tender costs and annual premiums are general overheads not attributable to the specific delay.

Question 37Construction and infrastructure economics

A bill item is described as 'extra over' for excavating in rock compared with ordinary soil. What does this description mean in measurement terms?

  1. The rate covers the whole cost of rock excavation
  2. The rate is a daywork rate for plant
  3. The rate is a provisional sum for unforeseen ground
  4. The rate covers only the additional cost of rock excavation above the soil rate Correct answer.

Explanation

An extra over item prices only the additional cost of the more difficult work over the base rate already priced elsewhere. It avoids double counting the whole cost of the operation. The base rate for excavation is priced separately and the extra over adds the difference.

Question 38Construction and infrastructure economics

A client wants to compare the capital cost of two structural frames with different construction periods. Which adjustment is most relevant to a fair comparison?

  1. Ignoring the construction period because it does not affect capital cost
  2. Applying the same contingency percentage to both
  3. Comparing only the material cost of each frame
  4. Adding the time-related preliminaries and financing cost of the longer period Correct answer.

Explanation

A frame that takes longer to build incurs more time-related preliminaries and more financing cost on the capital employed. A fair capital comparison must add these consequential costs to the construction price. Material-only comparison and a uniform contingency ignore these differences.

Question 39Construction and infrastructure economics

Which statement best describes the role of a contingency allowance in a project cost plan?

  1. It provides for unknown risks and changes that cannot be foreseen Correct answer.
  2. It covers known risks that have been identified and priced
  3. It replaces the need for a risk register
  4. It is a fee paid to the contractor for early completion

Explanation

A contingency is an allowance for unforeseen events and changes that cannot be identified in advance, distinct from priced allowances for known risks. It does not remove the need for a risk register and is not a completion bonus. Known risks are typically covered by specific allowances.

Question 40Construction and infrastructure economics

A contractor's tender is evaluated and found to be the lowest, but a number of its rates are significantly unbalanced. What is the main risk to the employer?

  1. The tender may be withdrawn before acceptance
  2. The contractor may refuse to sign the contract
  3. The employer may pay more than the fair value if quantities change Correct answer.
  4. The contractor may go into liquidation before completion

Explanation

Unbalanced rates concentrate profit in items likely to increase or in early items, so if quantities change the employer can pay more than the work is worth. The risk is financial exposure through re-measurement, not necessarily insolvency or refusal to sign. The employer should therefore scrutinise rate build-ups before acceptance.

Question 41Construction and infrastructure economics

Which item is normally excluded from the measured works in a bill of quantities and instead covered by the preliminaries section?

  1. Concrete to ground beams measured by volume
  2. Temporary site fencing and security Correct answer.
  3. Blockwork to internal walls measured by area
  4. Formwork to columns measured by area

Explanation

Temporary site fencing and security are site-wide, time-related costs that belong in the preliminaries. Concrete, formwork and blockwork are permanent works measured by quantity. The distinction keeps temporary and permanent work separately priced and assessed.

Question 42Construction and infrastructure economics

A client is considering a construction management route for a large, fast-track project. Which characteristic is most typical of this route?

  1. The client contracts directly with trade contractors and appoints a construction manager Correct answer.
  2. The contractor is paid a fixed lump sum for all work
  3. A single contractor takes design responsibility for the whole project
  4. Design and construction are carried out by the same organisation

Explanation

In construction management the client holds the trade contracts and appoints a construction manager to coordinate the works, which allows early start on site before design is complete. It does not give a single design-and-build contractor, and it is not a lump sum arrangement. The client retains more risk and more direct contractual relationships.

Question 43Construction and infrastructure economics

A quantity surveyor is preparing a cost plan and must decide how to treat a client-held allowance for future fit-out that may or may not proceed. Which treatment is most appropriate?

  1. Show it as a separate option or provisional allowance outside the base estimate Correct answer.
  2. Include it as a firm commitment in the base estimate
  3. Add it to the contingency percentage
  4. Exclude it entirely and note nothing

Explanation

Work that may or may not proceed should be shown separately from the base estimate so the client can see the cost of the option without distorting the committed budget. Including it in the base overstates the firm commitment, while excluding it silently hides a real potential cost. A separate allowance preserves clarity.

Question 44Construction and infrastructure economics

Which statement correctly describes the effect of inflation on a fixed-price contract let over a long construction period?

  1. Price rises are automatically reimbursed through a formula
  2. The contractor bears the risk of price rises during construction Correct answer.
  3. The employer bears the risk of price rises during construction
  4. The contract sum is adjusted annually by the employer

Explanation

In a fixed-price contract the contractor carries the risk of cost inflation during the construction period, which is why tenderers may add a risk premium for long programmes. Reimbursement through a formula applies to fluctuation contracts, not fixed-price ones. Automatic annual adjustment is not a feature of a fixed-price arrangement.

Question 45Construction and infrastructure economics

A contractor is preparing a cash flow forecast for a project with monthly interim valuations and a one-month payment period. Which factor most directly delays the receipt of cash relative to work done?

  1. The number of subcontractors employed
  2. The type of contract used
  3. The contractor's profit margin
  4. The measurement and certification cycle plus the payment period Correct answer.

Explanation

Cash arrives after work is measured, certified and then paid according to the payment period, so the combined cycle creates a lag. Profit margin affects the amount, not the timing. The number of subcontractors and contract type do not by themselves determine the payment lag.

Question 46Construction and infrastructure economics

A quantity surveyor is asked to advise whether a proposed project is affordable within the client's budget. Which action is the most appropriate first step?

  1. Appoint a contractor on a cost-plus basis
  2. Invite tenders from selected contractors
  3. Prepare a detailed bill of quantities for tender
  4. Carry out an order-of-magnitude estimate and compare it with the budget Correct answer.

Explanation

Affordability is tested early by comparing an order-of-magnitude estimate with the available budget before committing to design or procurement. A detailed bill and tender invitations come later once the project is shown to be viable. Appointing a contractor on cost-plus would commit the client before affordability is established.

Question 47Construction and infrastructure economics

A contract includes a clause allowing the employer to deduct liquidated damages for late completion. What is the economic function of this provision?

  1. To pre-estimate the employer's loss from delay and fix the amount payable Correct answer.
  2. To penalise the contractor for any breach of contract
  3. To replace the contractor's obligation to complete on time
  4. To fund the employer's additional supervision costs

Explanation

Liquidated damages are a genuine pre-estimate of the employer's loss from late completion, agreed in advance so the amount is certain and enforceable. They are not a general penalty for any breach, and they do not remove the obligation to complete. Their purpose is to fix compensation, not to punish.

Question 48Construction and infrastructure economics

A client is comparing two heating systems. System A has a lower capital cost but higher annual energy cost; System B has a higher capital cost but lower annual energy cost. Which method best supports the decision?

  1. Choosing the system with the lowest maintenance cost
  2. Calculating the payback period or net present value of the extra capital cost Correct answer.
  3. Selecting the system with the shortest installation period
  4. Comparing capital costs only

Explanation

Where options differ in both capital and running cost, the decision should compare the extra capital outlay against the future savings using payback or discounted cash flow. Comparing capital only ignores the running cost advantage of System B. Maintenance cost and installation period are relevant but do not capture the energy trade-off.

Question 49Construction and infrastructure economics

In a bill of quantities, why are items for work below ground often measured separately from work above ground?

  1. To reflect the greater uncertainty and risk associated with ground conditions Correct answer.
  2. To reduce the number of items in the bill
  3. To allow different contractors to tender for each section
  4. To satisfy building regulation requirements

Explanation

Ground conditions are less predictable, so separating below-ground work allows risk to be identified and priced explicitly and supports later re-measurement. It is not primarily about splitting contractors, regulation or reducing item numbers. Separate measurement gives both parties clearer visibility of where risk lies.

Question 50Construction and infrastructure economics

A contractor's tender is accepted and the contract sum is agreed. During the works the employer instructs a variation. What is the usual basis for valuing the variation?

  1. The contractor's original tender total divided by the number of items
  2. The lowest rate quoted by any subcontractor
  3. The employer's estimated cost of the change
  4. Rates in the contract bill where applicable, otherwise a fair valuation Correct answer.

Explanation

Variations are normally valued using rates in the contract bill where they are applicable, and by a fair valuation where they are not. Dividing the tender total or using the employer's estimate does not reflect the actual work. Subcontractor rates are not the contractual basis.