AACE International CCT Certification Prep

Questions and Answers

Which of the following is NOT considered an element of cost?

Cost Classifications

Cost Types

Cost Dimensions

Cost Reduction Strategies (correct)

What is the primary purpose of the AACE International CCT primer?

To provide exam questions for the CCT certification

To replace practical experience in cost techniques

To assist individuals in preparing for the CCT exam (correct)

To outline the history of AACE certifications

Which topic falls under the elements of analysis?

Statistics and Probability (correct)

Cost Estimating

People and Organizations in Enterprises

Quality Management

What is a key limitation of the CCT primer?

It cannot substitute for real-world knowledge and experience. Signup and view all the answers

Which area is NOT mentioned as enabling knowledge in the CCT primer?

Cost Analysis Techniques Signup and view all the answers

Which element under cost includes all pricing strategies?

Pricing Signup and view all the answers

Which of the following categories pertains to the topic of enterprise within society?

People and Organizations in Enterprises Signup and view all the answers

Where can individuals find the minimum requirements for AACE certifications?

At aacei.org Signup and view all the answers

What distinguishes overhead costs from direct costs?

Overhead costs do not become an integral part of the product. Signup and view all the answers

Which of the following best describes General and Administrative (G&A) costs?

Fixed costs not applicable to any specific project. Signup and view all the answers

Which statement is true regarding utilities in a business context?

Utilities include energy or water lost during delivery. Signup and view all the answers

Gross Profit is calculated by which of the following formulas?

Sales Revenue - Direct and Project Indirect Costs of Goods Sold Signup and view all the answers

What is the primary characteristic of burden costs?

They are consumed in processes but do not directly impact the product. Signup and view all the answers

Which of the following best classifies costs such as administration and insurance?

Indirect costs that relate to the firm as a whole. Signup and view all the answers

How can overheads impact a company's financial assessment?

They must be accounted for in the overall operating costs. Signup and view all the answers

What is a key challenge associated with overhead costs?

They are variably incurred and thus unpredictable. Signup and view all the answers

What is the primary characteristic of Fair Market Value-in-Place?

It accounts for installation and operational contributions. Signup and view all the answers

Which scenario best describes Fair Market Value-in-Exchange?

A transaction with no compulsion on either party. Signup and view all the answers

What time frame is typically considered for determining Orderly Liquidation Value?

Six months. Signup and view all the answers

In the context of Fair Market Value-in-Place, which factor is emphasized?

Awareness of all relevant facts. Signup and view all the answers

What distinguishes Fair Market Value-in-Exchange from Fair Market Value-in-Place?

It pertains to third-party transactions. Signup and view all the answers

How is Orderly Liquidation Value generally realized?

In a controlled liquidation with adequate funds for remarketing. Signup and view all the answers

Which aspect is NOT a requirement for Fair Market Value-in-Place?

The sale should reflect immediate market value. Signup and view all the answers

What is often referred to as the retail value in asset valuation?

Fair Market Value-in-Exchange. Signup and view all the answers

What is the definition of direct costs in construction?

Costs of installed equipment, material, labor, and supervision directly involved in the construction. Signup and view all the answers

Which of the following best describes distributable cost?

A cost item that is spread over other cost items rather than managed separately. Signup and view all the answers

What is escalation in terms of construction costs?

Provision for an increase in costs due to ongoing price level changes over time. Signup and view all the answers

Which of the following is NOT considered a direct cost during construction?

Utilities used in the construction site. Signup and view all the answers

What aspect does escalation NOT pertain to in cost management?

Historical cost analysis for completed projects. Signup and view all the answers

Which of the following best distinguishes between a cost index and historical cost analysis?

A cost index compares past costs to future projections. Signup and view all the answers

How do supply-and-demand factors influence escalation in construction costs?

They provide a basis for non-monetary changes in the market price of materials and labor. Signup and view all the answers

Which of the following best defines the relationship between direct costs and overhead costs?

Direct costs are easily identifiable, while overhead costs are allocated to the project as a whole. Signup and view all the answers

What is the primary purpose of a performance bond?

To ensure the work will be completed Signup and view all the answers

Retention funds are typically used to ensure what aspect of contract work?

That work is completed and tested satisfactorily Signup and view all the answers

Which type of bond guarantees that a bidder will agree to a contract based on their bid?

Bid bond Signup and view all the answers

The actual rates for performance bonds depend on what factors?

The financial soundness and capability of contractors Signup and view all the answers

What is the primary function of a payment bond?

To guarantee payment to labor and material suppliers Signup and view all the answers

Before awarding a contract, what should be verified about a contractor?

Their bonding capacity Signup and view all the answers

What does retainer typically refer to in construction contracts?

A percentage of contract value held until project completion Signup and view all the answers

What should contractors be aware of regarding bonding companies?

Different bonding companies have varying rates and policies Signup and view all the answers

Study Notes

AACE International CCT Certification Overview

AACE International provides a primer to assist candidates in preparing for the Certified Cost Technician (CCT) exam.
This primer should complement, not replace, actual knowledge and experience in cost management.

Elements of Cost

Cost Definitions: Resource consumed in completing a process, known as burden cost.
Cost Classifications: Costs categorized into direct, indirect, fixed, and variable, among others.
Pricing: Establishing values for goods and services, essential for cost estimation and contract bidding.
Cost Estimating: Process of forecasting the probable costs for a project.

Elements of Analysis

Statistics and Probability: Tools used to interpret data and assess risks within cost management.
Economic and Financial Analysis: Evaluates the financial viability of projects, considering cash flow and budget impacts.
Optimization and Models: Techniques used to maximize efficiency and minimize costs in projects.
Physical Measurement: Quantitative assessment of project progress and resource utilization.

Enabling Knowledge

Enterprise in Society: Understanding the societal role of organizations and economic impact on cost management.
People and Organizations: Dynamics that impact project success, including team functionality and stakeholder engagement.
Information Management: Technologies and processes for handling data crucial for informed decision-making.
Quality Management: Systems ensuring that services meet standards, affecting overall cost and efficiency.
Value Management: Assessment of project value creation relative to costs.

Fair Market Values

Fair Market Value-in-Place: Expected trade value of an asset at a specific time, considering installation and operational contribution.
Fair Market Value-in-Exchange: Retail value of equipment expected from a third-party transaction.
Orderly Liquidation Value: Estimated price from a planned sale of capital assets within six months.

General and Administrative Costs (G&A)

Fixed costs related to overall business operations, which are not tied to specific projects, but occur continuously.
Includes expenses for offices, staffing, and utilities.

Profit Calculations

Gross Profit: Revenue remaining after direct and project indirect costs are deducted from sales.
Considers overhead, profit margins, and operational expenses.

Bonds and Retention

Performance Bonds: Insurance guaranteeing contractor completion of work, influencing contract awards.
Bid Bonds: Guarantees entry into contract based on bid.
Payment Bonds: Ensures labor and materials are paid during project execution.
Retention (Retainage): A percentage of the contract value held until project completion and satisfactory testing.

Cost Index and Direct Costs

Cost Index: Relates past costs to current costs for better estimating and analysis.
Direct Costs: Expenses directly attributable to specific activities or items essential for project completion.
Distributable Costs: Costs allocated across multiple items instead of managed separately.

Escalation in Costs

Escalation: Adjustment for increases in costs over time due to factors like inflation and market demand.
Provides a provision for cost changes in contracts and purchase orders over the duration of a project.

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Description

This quiz is designed to help young professionals prepare for the AACE International Certified Cost Technician (CCT) certification. It emphasizes the importance of meeting the current minimum requirements laid out by AACE. Ensure you review the necessary knowledge and experience as part of your preparation.