Chapter 11 — Exercises

Work these with a calculator, a blank page, and no notes for Part A. Most items have no answer key here; selected answers are in Appendix J. Where an item is pure arithmetic, a numeric check is given in a <details> block — resist opening it until you have a number of your own.

Difficulty legend: ⭐ basic · ⭐⭐ applied · ⭐⭐⭐ advanced judgment · ⭐⭐⭐⭐ research and extension

Part A — Conceptual Understanding ⭐

A1. In one sentence, state what determines the accuracy of a cost estimate. Then name the thing most people wrongly believe determines it.

A2. Define value engineering using the value equation. Then give the one-sentence test that distinguishes genuine value engineering from a scope cut.

A3. Why must escalation be forecast to the midpoint of construction rather than to Notice to Proceed? Answer in terms of when money is actually spent.

A4. Name the three adjustments you must apply to a historical project cost before you can use it as a benchmark, and state the order you apply them in.

A5. What is a burden multiplier, and why does an estimator compute it before a value engineering workshop rather than during one?

A6. Explain the difference between design contingency and construction contingency. At what point in a project should design contingency reach zero, and why?

A7. UniFormat and CSI MasterFormat both organize construction cost. What does each organize by, and at which design phase is each the right tool?

A8. List the seven lenses of a constructability review. For each, write a one-line question you would actually ask while looking at a drawing.

A9. Why is "cost per exam room" a legitimate benchmark and an illegitimate way to price four additional exam rooms?

A10. Northgate's construction budget is $47,500,000 and the owner's total project budget is $61,000,000. Name five things in the $13,500,000 difference, and explain why a construction manager who does not know them gives bad advice.

Part B — Applied Analysis ⭐⭐

B1. An owner shows you a $/SF figure from a peer institution: "$312 per square foot, and their building is just like ours." Write the six questions you ask before that number is allowed to influence anything. For each, say what a wrong answer would do to your estimate.

B2. A design-build contractor tells an owner: "We'll do a conceptual estimate at programming and guarantee it, so you have certainty from day one." Using the estimate-class ladder, explain what that contractor is actually pricing into the guarantee, and predict how they will behave during design.

B3. Two independent estimating methods on the same project produce numbers 0.9% apart. Your project executive says the estimate is therefore reliable. Explain, in the language of the chapter, why that inference is unsound — and what convergence does legitimately tell you.

B4. A subcontractor proposes an unlisted manufacturer's rooftop unit that meets the specified capacity and efficiency, saves $46,000, and cuts eight weeks of lead time. Walk through the four-question decision test, then describe the procedure you actually follow and the two things you must not do.

B5. Your project's design contingency is 6% at schematic design. The owner asks why it is not 3%, since "the design looks pretty complete to me." Write your answer in under 120 words, without using the word padding.

B6. A VE option deletes a stormwater feature, saving $190,000 of construction and adding $34,000 per year to the owner's utility stormwater fee. Show why this is not a saving, compute how long it takes to become a loss, and say what column of the VE log should have caught it.

B7. Constructability finding CR-02 on Northgate — curtain-wall embeds shown on the architectural drawings and on no structural drawing — cost $118,000 and nine days when caught in the field. Explain why neither the architect nor the structural engineer was behaving unreasonably, and describe the specific review step that catches this class of error.

B8. A CM proposes to an owner: "Let's carry a high schematic budget. It gives us room, and when we come in under, everybody's happy." List the concrete, irreversible decisions the owner may make on that inflated number, and explain what the honest version of the same caution looks like.

B9. Your schematic estimate and the architect's independent cost consultant are 11% apart — yours is higher. The owner asks you to "reconcile and get to one number." Describe the reconciliation process you actually run: what you compare, in what order, and what you do about the categories of difference you find. Then answer the harder question: is the correct outcome always a single number?

B10. An owner's rep says: "Our last building was $328 a square foot, all in." Using the owner's-budget table in §11.5, list every plausible meaning of "all in" and compute what each one implies about the underlying construction cost of a 132,000 SF building. Then state what you would ask before letting that number enter any conversation about your project.

B11. Kestrel's preconstruction fee on Northgate was $185,000, and the constructability review portion — roughly $38,000 of Kestrel's cost — identified $435,000 of avoidable cost and up to 21 calendar days. Northgate's daily exposure is $10,650/CD. Compute the return on the review and on the total preconstruction fee. Then argue the other side: what would have to be true for an owner to be right to skip preconstruction services?

Part C — Calculations and Deliverables ⭐⭐–⭐⭐⭐

C1 — Escalation to the midpoint. A project is priced at today's costs. NTP is 22 months away. Contract time is 730 calendar days. Assume escalation of 3.6% per year and an escalatable base of $68,400,000.

(a) Compute the time from today to the midpoint of construction, in years. (b) Compute the escalation factor and percentage. (c) Compute the escalation line item. (d) Compute what you would have carried had you escalated only to NTP, and state the understatement in dollars.

C2 — Historical cost adjustment. A $52,700,000, 164,000 SF university science building was substantially complete 4 years ago after a 26-month construction period, in a metro with a published city cost index of 108.4. Your project is 196,000 SF in a metro with an index of 97.6. Escalation to apply: 4.1% per year. Size guideline: 1.5% unit-cost reduction per 10% area increase.

(a) Base unit cost. (b) Time-adjusted. (c) Location-adjusted. (d) Size-adjusted. (e) Total. (f) State the estimate class and an honest range. (g) Write three assumptions for the cover sheet.

C3 — Build a burden multiplier and use it. An estimate at design development carries: design contingency 4.5%, construction contingency 3.0%, escalation 5.8% (all on the cost of construction), and a fee of 3.75% on the subtotal.

(a) Compute the burden multiplier. (b) A VE option removes $412,000 of raw work. What is the burdened saving? (c) The gap you must close is $2,600,000. How much raw work must you find? (d) The same option, found instead at schematic design under Northgate's 1.2005 multiplier, is worth how much more?

C4 — Build a UniFormat conceptual estimate. A 58,000 SF, two-story municipal library: structural steel frame, spread footings, slab on grade, brick veneer over metal stud with an aluminum storefront entry, TPO roof, on a flat 3.4-acre site.

Build a UniFormat elemental estimate with at least 18 line items across elements A through G. Each line needs a quantity, a unit, a rate, and a subtotal. Where you do not have a quantity, use a defensible ratio (skin-to-floor, partition LF per SF, etc.) and write the ratio down. Then add general conditions, insurance and bonds, contingencies, escalation, and markup. Finally: divide by 58,000 SF and state whether the result is believable, and why.

C5 — Life-cycle comparison. Two exterior wall assemblies for a 42,000 SF enclosure area:

Assume 4,800 heating degree-day-equivalent hours, an average temperature difference of 24 °F across the assembly, a blended energy cost of $0.041 per kBtu delivered, and a burden multiplier of 1.18.

(a) Burdened first-cost delta. (b) Annual energy saving. (c) Annual maintenance saving. (d) Simple payback. (e) Then argue, in three sentences, whether simple payback is the right tool for this decision.

C6 — Write a qualifications and assumptions page. For the Willow Street Community Center (Appendix K), write a fourteen-item qualifications, clarifications, assumptions, and allowances page for a lump-sum bid. Requirements: at least three allowances with dollar amounts and written definitions of what each buys; at least two items addressing owner decisions and their dates; one item on subsurface; one on work hours and site access; one on weather; and a clear exclusions item. Every item must be a sentence a stranger could enforce.

C7 — Skin-to-floor ratio and the shape of the money. A 148,000 SF office building is designed as 5 stories on a square floor plate of about 29,600 SF (roughly 172' × 172'), floor-to-floor 13'-6", with a 4'-0" parapet. Blended enclosure cost: $96.00/SF of wall. Roof: $19.00/SF. Slab on grade: $9.40/SF.

(a) Compute the perimeter, the total enclosure area, and the skin-to-floor ratio (enclosure SF ÷ building SF). (b) Compute the enclosure cost, both in total and per square foot of building. (c) Now reshape the same 148,000 SF as 3 stories on a square plate. Recompute (a) and (b). (d) Compute the net cost difference between the two schemes, accounting for the increase in roof and slab-on-grade area. (e) Northgate's skin-to-floor ratio is 59,500 ÷ 132,000 = 0.451. Given your answers, what does that number tell you about the building, and what should it have told Tomás before he priced a single element? (f) Name four costs that your (d) calculation does not capture and that could reverse the conclusion.

C8 — Constructability review. Take the Willow Street drawing descriptions in Appendix K and produce a constructability review log with at least eight findings, organized by the seven lenses. Each finding needs: the observation, the lens, the consequence if not caught, an estimated dollar and/or day exposure, and a recommended resolution. At least one finding must be a safety finding — a hazard the design could remove.

Part D — Judgment and Ethics ⭐⭐⭐

D1. An owner instructs you, in a meeting, to reduce the construction contingency from 4% to 1.5% so the project fits the board's number. They are not being reckless; they genuinely believe your contingency is conservative and they have run projects before. Write what you say in the meeting, and then write the follow-up letter you send if they insist. What does the letter have to contain to protect the owner — not you?

D2. You are the CM. Your fee is 4% of cost. A VE option saves $600,000 of construction and, in your honest judgment, makes the building materially worse to operate. Your fee falls by roughly $25,000 if it is accepted, and your firm's project executive wants the gap closed. Describe how you present the option, and name every incentive in the room out loud.

D3. You review the 90% CD set and conclude the mechanical engineer has undersized the air-handling capacity to hold the budget. You have no calculation authority and no contractual standing to say so. What do you do, to whom, and in what form? What are the consequences of saying nothing, and of saying it the wrong way?

D4. Kestrel accepted VE-04 (imaging structural simplification, $267,700) knowing the imaging vendor was unselected, and rejected VE-13 (spare conduit, $117,600) for exactly that reason. Write the decision rule that reconciles them. Then test your rule against a case where it gives an uncomfortable answer.

D5. A competitor wins a CM at Risk selection against your firm by presenting a schematic budget $3.2 million below yours on the same documents. Eighteen months later their GMP lands $4.1 million above your schematic number. The owner is furious and calls you. What do you say, and what do you not say? Is there anything you could have done at the interview that would have been both honest and effective?

Part M — Mixed and Interleaved Practice ⭐⭐–⭐⭐⭐

M1 — with Chapter 3 and Chapter 4. Take the Northgate value engineering log and ask what happens to each of the thirteen accepted items under three delivery/contract combinations: (a) CM at Risk with GMP as built, (b) design-bid-build lump sum, (c) design-build. For each combination, say which items are still possible, who captures the savings, and who owns the risk of the change. Then state the general principle your table demonstrates.

M2 — with Chapter 6. Build a bottom-up construction contingency for Northgate's GMP that totals $1,320,000. You need at least ten named risks, each with a probability, an impact range, an owner, and a response. Then use your register to write the two-paragraph rebuttal to VE-14 — the proposal to halve the contingencies — that a CFO could not dismiss.

M3 — with Chapter 7. A VE option substitutes a product the specification does not list. Trace the full path: which document governs, what procedure applies, who reviews, what the contractor may and may not do while it is pending, and what happens at closeout if the substitution was made informally. Then write the two-line VE log entry that keeps this straight.

M4 — with Chapter 10. VE-06 (floor-to-floor reduction) was killed by MEP coordination in four minutes because a coordinated model existed at schematic design. Take three other plausible VE options on a healthcare building and predict, before pricing them, which will fail the same test and why. Then state what this implies about when a VDC model earns its cost.

M5 — with Chapter 2. Reconstruct, in plausible outline, the pro forma that produced Meridian's $47,500,000 construction budget inside a $61,000,000 project budget: what revenue, what financing, what constraints. Then answer: what would actually have to be true for Meridian to approve $50,000,000 instead — and who would have to approve it?

M6 — forward to Chapter 12 and Chapter 14. Take three lines from the Northgate UniFormat estimate — one priced per unit of quantity, one priced per square foot of building, one priced as a lump sum. For each, describe exactly what you would have to know to convert it into a detailed, quantity-based estimate, and identify which of the three carries the most hidden risk and why. Then say which of the three drives the schedule and how you would find out.

Part E — Research and Extension ⭐⭐⭐⭐

E1. Find AACE International's current published guidance on cost-estimate classification. Compare its ranges and design-completeness definitions to the plain-language table in §11.2 of this chapter. Where do they differ, and what does the difference tell you about how the classification system is meant to be applied across industries? Write 500 words. Do not quote text you have not read.

E2. Obtain a real preconstruction services agreement — from your employer, from a public agency's published procurement package, or from a standard form's published table of contents. Compare its enumerated scope of services against the table in §11.1. What is included that this chapter does not mention? What is missing? What is the fee, and how is it structured — fixed, hourly, percentage, credited against the construction contract?

E3. Pull the published cost indices for two metros you know — from ENR, RSMeans, or another documented source — and track them over the last available five years. Compute the year-over-year escalation implied by each. Then answer the practitioner's question: if you had been forecasting escalation to a midpoint two years out at the start of that period, how wrong would you have been, and in which direction? Write down what that tells you about how to present an escalation assumption to an owner.