Project Influence and Financial Terminology Quiz
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Questions and Answers

What is Forced Liquidation Value commonly known as?

  • Economic Value
  • Scrap Value
  • Wholesale Value (correct)
  • Book Value

    • Which of the following values is derived from the resale of individual components of equipment?

  • Forced Liquidation Value
  • Salvage Value (correct)
  • Book Value
  • Scrap Value

    • How is Book Value calculated?

  • Original value plus depreciation
  • Current market value of a corporation's assets
  • Original value less depreciated accruals (correct)
  • Future economic potential of property

    • What does Scrap Value refer to?

    <p>Basic commodity value of equipment</p> Signup and view all the answers

    What is the definition of Residual or Economic Value?

    <p>Value considering all expected economic uses</p> Signup and view all the answers

    What is NOT a characteristic of Forced Liquidation Value?

    <p>Reflects functional worth</p> Signup and view all the answers

    Book Value can also be described as the value of what?

    <p>Shares of stock of a corporation</p> Signup and view all the answers

    What differentiates Salvage Value from Scrap Value?

    <p>Salvage Value considers functional components; Scrap Value does not</p> Signup and view all the answers

    What is the primary purpose of a union?

    <p>To advocate for members' interests regarding compensation and working conditions</p> Signup and view all the answers

    What does 'open shop' refer to in employment?

    <p>A condition where both union and non-union workers can be employed</p> Signup and view all the answers

    What is a significant cost consideration when hiring union versus open shop labor?

    <p>Union labor is associated with higher wages based on agreements</p> Signup and view all the answers

    What is a reimbursable cost?

    <p>An amount expended by an employee, refundable under firm’s rules</p> Signup and view all the answers

    What does the Davis Bacon Act mandate for public works projects?

    <p>Workers must be paid no less than prevailing wages in the area</p> Signup and view all the answers

    What distinguishes non-reimbursable costs from reimbursable costs?

    <p>Non-reimbursable costs cannot be refunded under company rules</p> Signup and view all the answers

    In what scenario would the Davis Bacon Act be applicable?

    <p>For most federally assisted construction projects over $2,000</p> Signup and view all the answers

    What is the implication of using small tools and consumables in construction?

    <p>They are required but not included in the final installation</p> Signup and view all the answers

    What does the term 'Fair Value' refer to in property valuation?

    <p>An estimate of value that is fair to all parties involved, considering all relevant factors.</p> Signup and view all the answers

    How is 'Market Value' defined in the context of property transactions?

    <p>The agreed price between a buyer and a seller in a competitive market, considering all material facts.</p> Signup and view all the answers

    What factors are considered when calculating 'Fair Value'?

    <p>Utility and adjustments related to the cost of similar items.</p> Signup and view all the answers

    Which statement best describes the concept of 'Market Value'?

    <p>It fluctuates depending on both the buyer's and seller's willingness in the transaction.</p> Signup and view all the answers

    What role does the 'capital budget' play in facility component replacement?

    <p>It identifies costs that are expected to incur during the study period related to component replacement.</p> Signup and view all the answers

    What should be accounted for when determining the 'adjusted cost new' of an item?

    <p>The utility of the item and standard adjustments to the list price.</p> Signup and view all the answers

    How does the term 'utility' relate to property valuation?

    <p>It indicates the functional usefulness of the property or item.</p> Signup and view all the answers

    Which factor does NOT influence 'Market Value'?

    <p>The actual replacement cost of the property.</p> Signup and view all the answers

    Which phase of the project life cycle shows a rapidly decreasing level of influence on scope definition?

    <p>Turnover &amp; Start-up</p> Signup and view all the answers

    At which stage do project expenditures begin to have a major influence?

    <p>Project Authorization</p> Signup and view all the answers

    What is the correct sequence of stages in the project life cycle?

    <p>Pre-Project Planning, Authorization, Production</p> Signup and view all the answers

    Which of the following represents a low influence stage in project expenditures?

    <p>Turnover &amp; Start-up</p> Signup and view all the answers

    Which phase is associated with rapid increase in influence at the start of project expenditures?

    <p>Pre-Project Planning</p> Signup and view all the answers

    During which phase is the project expenditure's influence considered to be at a moderate level?

    <p>Construction</p> Signup and view all the answers

    Which term best describes the influence of project expenditures during Conceptual Analysis?

    <p>High Influence</p> Signup and view all the answers

    Which of the following phases entails the least influence over project expenditures?

    <p>Turnover &amp; Start-up</p> Signup and view all the answers

    What is the primary purpose of pricing in a bid process?

    <p>To fully include direct and indirect costs, along with contingency and profit</p> Signup and view all the answers

    What does an addendum typically do in the context of bidding documents?

    <p>Makes changes to the bidding documents through additions or clarifications</p> Signup and view all the answers

    How is an allowance defined in cost estimating?

    <p>Additional resources for known but undefined requirements</p> Signup and view all the answers

    What characterizes an alternate in a bid request?

    <p>Requests the cost for adding or deleting items from the basic bid</p> Signup and view all the answers

    What components are typically included in bid documents?

    <p>Advertisement for bids, instructions, information for bidders, and all addenda</p> Signup and view all the answers

    Why are allowances important in cost estimating?

    <p>They cover costs of known but undefined requirements</p> Signup and view all the answers

    What is the difference between additive and deductive alternates?

    <p>Additive alternates only increase the cost, while deductive ones decrease it</p> Signup and view all the answers

    What does the pricing process ensure regarding profits?

    <p>Profits are calculated after all direct and indirect costs are included</p> Signup and view all the answers

    Study Notes

    Project Influence and Expenditures

    • Influence varies throughout the project lifecycle, from conceptual analysis to start-up.
    • Project expenditures can be categorized based on levels of influence: major, rapidly decreasing, and low influence.
    • The degree of influence impacts project scope and expenditures across different phases including planning and procurement.
    • Facility component replacement costs are included in the capital budget during the study period.
    • Fair Value: Reflects a reasonable estimate of property value after considering adjustments and utility.
    • Market Value: Agreed monetary price between a willing buyer and seller, influenced by market conditions.
    • Forced Liquidation Value: Price obtainable at auction when time constraints are significant, often called "blow-out" value.
    • Salvage Value: The money a buyer will pay for usable parts of equipment, often for repair or resale.
    • Scrap Value: Represents the basic commodity value of equipment.

    Asset Valuation Concepts

    • Book Value: The current investment value minus depreciated accruals, calculated as original down from the net asset value.
    • Residual or Economic Value: The property value considering all expected economic uses over any specific use.

    Labor Types

    • Union Labor: Organizations advocating for wage earners’ interests regarding compensation and working conditions.
    • Open Shop Labor: Employment conditions where both union and non-union workers are permitted, with no union agreements in place.
    • Understanding cost differences between union and open-shop labor is vital, particularly in reference to prevailing wage laws.

    The Davis Bacon Act

    • Enacted in 1931; mandates prevailing wages on federal public works projects.
    • Contracts over $2,000 must ensure on-site workers are paid at least the local prevailing wages and benefits.

    Subcontracting Considerations

    • Reimbursable Costs: Expenditures that can be refunded under company rules.
    • Non-Reimbursable Costs: Expenditures that cannot be refunded to employees.
    • Pricing: Setting charges to cover all direct and indirect costs, along with potential contingencies and profits.

    Cost Estimating Terminology

    • Addendum: Written changes issued before bids are opened, affecting bid documents and details.
    • Allowances: Resources included in estimates for undefined requirements of specific activities or work items.
    • Alternate: Owner’s cost request for adding or deleting items from bids; additive alternates involve additions, deductive alternates involve deletions.
    • Bid Documents: Composed of advertisements, instructions, and contracts detailing all aspects of bidding and proposals.

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    Related Documents

    AACE International Certified Cost Technician Primer PDF

    Description

    Test your knowledge on the various influences and expenditures throughout the project lifecycle, as well as legal and financial terms related to budgeting and property values. This quiz covers important concepts such as fair value, market value, and salvage value, providing a comprehensive overview of financial terminology in project management.

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