Construction Costs and Profits

Questions and Answers

What is the definition of project cost?

The expenses incurred for team training during the project

The total funds needed to complete a business transaction or work project (correct)

The funds allocated for marketing the project

The revenue generated from the project's completion

Which of the following represents the value triple constraint (VTC)?

Profit, Risk, Schedule

Value, Efficiency, Output

Quality, Resources, Stakeholders

Cost, Scope, Time (correct)

What are direct costs in a project?

Costs that can be indirectly related to project completion

Costs related to marketing and promotion

Overall costs that encompass all project-related expenditures

Costs directly related to producing the project's products and services (correct)

What does the term 'scope' refer to in a project?

The tasks required to fulfill the project’s goals Signup and view all the answers

How can the relationship of the value triple constraint impact project management?

It can guide project decisions to improve outcomes Signup and view all the answers

Which of the following is NOT a component of the value triple constraint?

Quality Signup and view all the answers

What is the relationship between time and project cost?

Shortening the time frame generally increases project costs Signup and view all the answers

What impact do financial constraints have on project management?

They can lead to project scope reduction or timeline extension Signup and view all the answers

What does the term 'opportunity cost' refer to?

The value of the alternative forgone by choosing a particular activity. Signup and view all the answers

Which process group is responsible for defining a new project or phase?

Initiating Process Group Signup and view all the answers

What is a primary focus of construction economics?

The allocation of scarce resources. Signup and view all the answers

Which of the following best describes the Executing Process Group?

It involves completing the work defined in the project management plan. Signup and view all the answers

The Planning Process Group serves which main purpose?

To establish the scope and define the required course of action. Signup and view all the answers

What is one characteristic of projects that are deemed vital to community sustainability?

They often seem unappealing at first glance. Signup and view all the answers

In construction management, what does the term 'process groups' refer to?

A logical grouping of project management processes. Signup and view all the answers

Which of the following statements about resource allocation in construction economics is TRUE?

Effective resource allocation can enhance project outcomes. Signup and view all the answers

What was the growth rate of the construction industry in the Philippines for the second quarter of 2021?

25.7% Signup and view all the answers

What is the construction industry's contribution to gross capital formation in the Philippines?

69.6% Signup and view all the answers

As of June 2021, what percentage of total employment in the Philippines was attributed to the construction industry?

9.6% Signup and view all the answers

How many workers did the construction industry employ on average in June 2021?

4.337 million Signup and view all the answers

Which sector does residential building construction primarily address?

Housing needs Signup and view all the answers

What was the overall GDP growth rate in the Philippines for the second quarter of 2021?

11.8% Signup and view all the answers

What is one way the construction industry contributes to the economy?

Creating job opportunities Signup and view all the answers

Which of the following best describes the construction industry?

A branch of manufacture and trade based on building and maintaining structures Signup and view all the answers

What is the main purpose of the monitoring and controlling process group?

To track progress, review performance, and regulate changes Signup and view all the answers

Which process group is involved in formally completing the project or phase?

Closing Signup and view all the answers

Which knowledge area focuses on managing the timely completion of the project?

Schedule Management Signup and view all the answers

What does project scope management ensure?

Only the required work is included in the project Signup and view all the answers

What is included in project cost management?

Estimating, budgeting, and managing costs Signup and view all the answers

What are the traditional project values provided by the construction management team?

Cost, time, quality, safety Signup and view all the answers

Which of the following is a primary function of project quality management?

Incorporating the organization’s quality policy Signup and view all the answers

What does project integration management involve?

Defining and coordinating project activities Signup and view all the answers

Which two project values are typically determined before the construction manager is involved?

Scope and function Signup and view all the answers

What is the primary goal regarding costs in a construction project?

To maintain costs within or below budget Signup and view all the answers

Which of the following is NOT a focus of project management knowledge areas?

Ensuring stakeholder satisfaction Signup and view all the answers

How does a construction manager optimize the cost dial?

By minimizing costs while maximizing overall value Signup and view all the answers

What effect does the phrase 'time is money' have on construction projects?

It highlights the value of speed over other factors. Signup and view all the answers

What analogy is used to describe the factors that need to be managed in a project?

The six dials of project value Signup and view all the answers

Under which condition do construction professionals assist with scope definition?

When they are involved early in the project delivery process Signup and view all the answers

Which factors are typically tracked and measured against estimates during a construction project?

Material, labor, equipment, and subcontract amounts Signup and view all the answers

Study Notes

Project Fundamentals

Projects are governed by three key constraints: Cost, Scope, and Time.
The Value Triple Constraint emphasizes the interrelation of these three factors, influencing project outcomes positively or negatively.

Project Cost

Total funds necessary to complete a project or business transaction.
Direct costs are the funds attributed to producing specific products or services related to the project.

Construction Industry Overview

The construction sector involves building, maintaining, and repairing structures, including mineral exploration.
Significant contributor to economic growth, accounting for a substantial portion of capital investments.

Construction Industry in the Philippines

The construction industry spurred an 11.8% GDP growth in Q2 2021, with a remarkable 25.7% growth in construction activities.
Construction accounted for 69.6% of gross capital formation and has a 16.6% share of GDP by expenditure.
The sector employed an average of 4.337 million workers, representing 9.6% of total employment as of June 2021.

Residential Building Sector

Essential for addressing housing demands within communities, playing a critical role in industry sustainability.

Construction Economics

Focuses on the allocation of limited resources to maximize output.
Opportunity cost reflects the value of the alternative sacrificed in choosing a specific activity.

Project Management Process Groups

Initiating: Defines new projects and obtains authorization.
Planning: Establishes project scope, objectives, and action pathways.
Executing: Completes tasks in accordance with the project management plan.
Monitoring and Controlling: Tracks project progress, reviews performance, and makes necessary plan adjustments.
Closing: Formally finalizes project, phase, or contract completion.

Knowledge Areas in Project Management

Project Integration Management: Combines various project activities to achieve objectives.
Project Scope Management: Ensures only the necessary work is included for project success.
Project Schedule Management: Manages timelines to ensure timely project completion.
Project Cost Management: Plans and controls project costs to adhere to budget constraints.
Project Quality Management: Oversees quality standards to meet stakeholders’ expectations.

Project Value Factors

Six dials of project value are crucial for successful project outcomes: cost, time, quality, safety, scope, and function.
The manager's role includes optimizing the first four dials while the last two are often predetermined by the owner and design team.

Importance of Cost Control

Accurate cost prediction and control are critical for project success.
Expenditures on materials, labor, and subcontracts are continuously tracked against budget estimates to maintain financial discipline.
Prioritizing speed in project delivery can often be as critical as maintaining low costs.

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Description

This quiz explores the financial constraints of construction projects, focusing on budgeting and the tasks required to achieve project goals. It covers essential concepts related to costs and profits in the construction industry, providing a foundational understanding for students specializing in cost management.

Construction Costs and Profits - AR 591A