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Questions and Answers
What is the primary purpose of analyzing payment schemes using internal rate of return (IRR)?
What is the primary purpose of analyzing payment schemes using internal rate of return (IRR)?
- To compare the profitability of different contractors
- To examine the economic impact of varying payment strategies (correct)
- To determine the optimal payment schedule
- To calculate the net present value of a project
What is the effect of the mobilization payment on the revenue profile of the project?
What is the effect of the mobilization payment on the revenue profile of the project?
- It increases the peak financial requirement
- It has no impact on the revenue profile
- It reduces the net present value of the project
- It moves the revenue profile closer to the expense curve (correct)
What is the range of the IRR value for the original payment sequence?
What is the range of the IRR value for the original payment sequence?
- Between 18 and 20%
- Between 20 and 22% (correct)
- Between 24 and 26%
- Between 22 and 24%
What is the impact of the mobilization payment on the contractor's return on investment (ROI)?
What is the impact of the mobilization payment on the contractor's return on investment (ROI)?
What is the primary reason for the increase in the contractor's ROI due to the mobilization payment?
What is the primary reason for the increase in the contractor's ROI due to the mobilization payment?
What is the new final payment amount after the mobilization payment is deducted?
What is the new final payment amount after the mobilization payment is deducted?
What is the correct IRR value for the alternative payment sequence including the mobilization payment?
What is the correct IRR value for the alternative payment sequence including the mobilization payment?
What is the primary purpose of calculating the net values [Net(i)] for the five periods?
What is the primary purpose of calculating the net values [Net(i)] for the five periods?
What is the primary objective of cost control in project management?
What is the primary objective of cost control in project management?
What is the purpose of a project cost code structure?
What is the purpose of a project cost code structure?
What is the earned value method used for in project management?
What is the earned value method used for in project management?
What is the purpose of labor cost data collection in project management?
What is the purpose of labor cost data collection in project management?
What are charges for indirect and overhead expenses in project management?
What are charges for indirect and overhead expenses in project management?
What is the purpose of integrating cost accounts into project management systems?
What is the purpose of integrating cost accounts into project management systems?
What is the primary function of cost accounts and coding systems in project management?
What is the primary function of cost accounts and coding systems in project management?
What is the impact of paying a $30,000 mobilization payment immediately on commencement of the job?
What is the impact of paying a $30,000 mobilization payment immediately on commencement of the job?
What determines the sophistication of a cash flow projection method?
What determines the sophistication of a cash flow projection method?
What does the $5,000 monthly cost represent in the cash flow projection?
What does the $5,000 monthly cost represent in the cash flow projection?
How are direct costs assumed to be distributed across the duration of an activity in the simplified project?
How are direct costs assumed to be distributed across the duration of an activity in the simplified project?
Which element shows the total monthly and cumulative monthly expenditures in the cash flow projection?
Which element shows the total monthly and cumulative monthly expenditures in the cash flow projection?
What does the middle section of the S-curve indicate?
What does the middle section of the S-curve indicate?
What causes the expenditures to flatten towards the end of the project?
What causes the expenditures to flatten towards the end of the project?
How is the graphical portrayal of the outflow of monies achieved in the cash flow projection?
How is the graphical portrayal of the outflow of monies achieved in the cash flow projection?
What information is indicated by the bars positioned along a time scale in the cash flow projection?
What information is indicated by the bars positioned along a time scale in the cash flow projection?
What is the form of payment from the owner to the contractor?
What is the form of payment from the owner to the contractor?
When do the retainage terms drop out of the equation?
When do the retainage terms drop out of the equation?
Why does the revenue profile have a stair-step appearance?
Why does the revenue profile have a stair-step appearance?
What does the shaded area between the revenue and expense profiles indicate?
What does the shaded area between the revenue and expense profiles indicate?
What can contractors request to offset the overdraft borrowing requirement?
What can contractors request to offset the overdraft borrowing requirement?
Why can the owner borrow short-term money at a lower interest rate compared to the contractor?
Why can the owner borrow short-term money at a lower interest rate compared to the contractor?
What is indicated by the S-curve in construction?
What is indicated by the S-curve in construction?
What must the contractor know to determine how much credit to make available at the bank?
What must the contractor know to determine how much credit to make available at the bank?
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