Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1)
1)
Project management teams should be evaluated on which of the following?
A)
Quality
B)
Financial performance
C)
Schedule
D)
All of the above
Answer:
D
A)
B)
C)
D)
2)
2)
Which of the following methods would be used to allocate general overhead associated with the
inventory of materials?
A)
Percentage of a company’s revenues
B)
Incremental general overhead costs
C)
Material costs
D)
Usage of overhead
Answer:
C
A)
B)
C)
D)
3)
3)
Which of the following can reduce the profit earned by a crew?
A)
Good planning
B)
Poor scheduling
C)
Using the wrong class of workers
D)
B and C
Answer:
D
A)
B)
C)
D)
4)
4)
The company’s best customers are found in which of the following quadrants?
A)
B)
C)
D)
Answer:
A
A)
B)
C)
D)
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5)
5)
Which of the following methods would be used to allocate general overhead when there is a
relationship between the amount of revenue generated by a profit center and the amount of
general overhead used by that profit center?
A)
Labor cost or hours
B)
Material costs
C)
Usage of overhead
D)
Percentage of a company’s revenues
Answer:
D
A)
B)
C)
D)
6)
6)
When performing a profit center analysis, which of the following would not be used to measure
the performance of the types of jobs?
A)
Gross profit margin
B)
Return on cash invested
C)
Number of jobs
D)
Consumption of management’s time
Answer:
C
A)
B)
C)
D)
7)
7)
The profit earned by the project management team cannot be attributed to which of the following?
A)
Good crew management
B)
Reducing overhead
C)
Controlling material waste
D)
Good scheduling
Answer:
A
A)
B)
C)
D)
8)
8)
Which of the following would not increase the profit made on the bidding and buyout process?
A)
Skillful jobsite management
B)
Skillful bidding
C)
Skillful subcontractor negotiations
D)
Skillful purchasing
Answer:
A
A)
B)
C)
D)
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9)
9)
Which of the following are sources of profit?
A)
Bidding and buyout process
B)
Project management teams
C)
Crews
D)
All of the above
Answer:
D
A)
B)
C)
D)
10)
10)
Which of the following methods would be used when considering the elimination of a profit
center?
A)
Incremental general overhead costs
B)
Percentage of a company’s revenues
C)
Usage of overhead
D)
Material costs
Answer:
A
A)
B)
C)
D)
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
11)
What must be done for profit calculation to be accurate?
Answer:
For profit calculations to be accurate, the budget must be a realistic estimate of the cost to complete the
project.
12)
How would the profit earned by a crew be determined?
Answer:
The profit earned by the foreperson as part of the management of the crews is the difference between
the budget for the work performed by the crew and the actual cost to perform the work.
13)
What must occur before supervisors can be held accountable for the profitability of their profit centers?
Answer:
Supervisors need to be given the authority and resources necessary to succeed. Without the authority
to make decisions, or if their decisions are constantly being overturned by upper management, the
managers of the profit center are simply carrying out orders from upper management and cannot be
held accountable for the decisions made by upper management.
14)
How can an estimator determine when to charge higher prices?
Answer:
One way to increase the markup is to identify those times when the market will allow contractors to
charge higher than normal prices for their work. The tracking of competitors’ bidding habits was
discussed in Chapter 10 as a way to help the company determine when this opportunity exists.
15)
Why should estimator be evaluated based on more than cost performance?
Answer:
If estimator’s performance is measured based only on profit, profit will come at the sacrifice of
schedule and quality. The cheapest subcontractors and suppliers will be chosen without regard to their
ability to meet the schedule and desired levels of quality.
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16)
How can schedule performance be measured?
Answer:
Schedule performance may be measured by determining the success rate in meeting scheduled
milestones. It is also useful to measure their schedule performance index at regular intervals and
determine the average schedule performance index for a set period of time as a measure of the ability
to stay on schedule between the milestones.
17)
Why might a company perform work in–house when the work can be subcontracted out for a lower price?
Answer:
It may be wise to pay more to perform the work in–housethereby sacrificing financial performance
for improved schedule and quality performance.
18)
How are the revenues and costs of each piece of equipment tracked?
Answer:
The revenues and the costs of each piece of equipment are tracked within the equipment ledger.
19)
Define profit center analysis.
Answer:
Profit center analysis is where management looks at the different activities of the company as centers
that generate the company’s profits.
20)
What is the purpose of a profit center analysis?
Answer:
Profit center analysis helps management determine if certain activities of the company are meeting its
goals, identifies places for change, and provides a quantitative analysis that helps management make
decisions, such as whether the company will self–perform work or subcontract the work out to other
companies.
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Answer Key
Testname: C11
1)
D
2)
C
3)
D
4)
A
5)
D
6)
C
7)
A
8)
A
9)
D
10)
A
11)
For profit calculations to be accurate, the budget must be a realistic estimate of the cost to complete the project.
12)
The profit earned by the foreperson as part of the management of the crews is the difference between the budget for
the work performed by the crew and the actual cost to perform the work.
13)
Supervisors need to be given the authority and resources necessary to succeed. Without the authority to make
decisions, or if their decisions are constantly being overturned by upper management, the managers of the profit
center are simply carrying out orders from upper management and cannot be held accountable for the decisions made
by upper management.
14)
One way to increase the markup is to identify those times when the market will allow contractors to charge higher
than normal prices for their work. The tracking of competitors’ bidding habits was discussed in Chapter 10 as a way
to help the company determine when this opportunity exists.
15)
If estimator’s performance is measured based only on profit, profit will come at the sacrifice of schedule and quality.
The cheapest subcontractors and suppliers will be chosen without regard to their ability to meet the schedule and
desired levels of quality.
16)
Schedule performance may be measured by determining the success rate in meeting scheduled milestones. It is also
useful to measure their schedule performance index at regular intervals and determine the average schedule
performance index for a set period of time as a measure of the ability to stay on schedule between the milestones.
17)
It may be wise to pay more to perform the work in–housethereby sacrificing financial performancefor improved
schedule and quality performance.
18)
The revenues and the costs of each piece of equipment are tracked within the equipment ledger.
19)
Profit center analysis is where management looks at the different activities of the company as centers that generate the
company’s profits.
20)
Profit center analysis helps management determine if certain activities of the company are meeting its goals, identifies
places for change, and provides a quantitative analysis that helps management make decisions, such as whether the
company will self–perform work or subcontract the work out to other companies.
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