ARE 5.0 (PjM/ PcM/ PA/ PPD/ PDD/ CE): Project Budget/ Financial UPDATED ACTUAL Exam Questions and CORRECT Answers

ARE 5.0 (PjM/ PcM/ PA/ PPD/ PDD/ CE):
Project Budget/ Financial UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Pro Forma - CORRECT ANSWER - Projected financial statements of future values:
expected project generated income vs. expected project building costs.
- Developed in order to determine whether the project is likely to be financially successful.


Bldg. cost factor - CORRECT ANSWER - - *Scope (Project size)*
- *Quality*
- *Construction Cost*


Bldg. cost variable factors? - CORRECT ANSWER - - *Quality*: quality level of
materials/ systems/ construction
- Quantity
- Funds
- Time
- Location (urban/ rural): labor rates/ material prices/ transportation
(One cannot be changed without changing one or more of the others)


Scope vs. Cost - CORRECT ANSWER - - Perimeter-to-floor area = increase unit cost
- Floor-to-floor height = increase unit cost
- Taller bldg. = increase unit cost


Cost vs. Time - CORRECT ANSWER - *Labor cost = 50% of construction cost*
- Longer schedule = increase construction/ labor cost
- Higher Labor cost = decrease Productivity

,Method:
- shorten schedule: fast-track
- Increase off-site manufacturing = decrease on-site labor cost/ erection time


Quality vs. Life cycle - CORRECT ANSWER - - Higher quality = higher initial cost =
higher efficient = longer life span
- Longer life span = lower operational cost = decrease maintenance/ replacement cost


(Architect sets) Project Budget based on _________ - CORRECT ANSWER - *Scope*
Most realistic and accurate way to establish a preliminary budget, because it is based on a
specific building type of a defined size on a specific site.


Project Budget (Cost analysis) - CORRECT ANSWER - The *sum* established by the
owner as available for the entire project on *hard cost & soft cost*
- *Influence design decision & project feasibility*


Project Budget items - CORRECT ANSWER - *Hard cost (A to F)*
(A) Building Costs: Area x $cost/ GSF
(B) Fixed Equipment: 5-30% of A
(C) Site Development: 5-30% of A
(D) *Total Construction (A+B+C) = Base Bid*
(E) Land Acquisition: per project
(F) Movable Equipment: 5-20% of A


*Soft cost (G to J)*
(G) Professional Fees: 5-10% of D
(H) Contingencies: 5-15% of D
(J) Administrative Fees: 1-2% of D

, Hard Costs - CORRECT ANSWER - Expenses directly associated with construction,
including materials, labor and contractors overhead and profit.


What's included in hard cost? - CORRECT ANSWER - Hard cost expenses:
(A) *Bldg. cost*: GC's fee (overhead, profit)
(B) *Fixed Equipment*
(C) *Site development*: Demo, sitework, parking, landscape
(D) *Construction cost* (A+B+C): *Base Bid*
(E) *Land acquisition*: land purchase cost
(F) *Movable Equipment*


Soft Costs - CORRECT ANSWER - Other project expenses such as *design fees, legal
fees, financing cost of the project, insurance, administrative costs* incurred by the owner and
moving expenses.


What's included in soft cost? - CORRECT ANSWER - Soft cost expenses:
(G) *Professional services*: A/E design fees, Inspection & Testings
(H) *Contingency allowances *: unforeseen, error & emissions
(J) *Administrative Fees*: Insurance & bond/ Permit/ Development impact fee/ Financing cost
(debt service/ escalation estimate)/ Moving expenses


Building Cost - CORRECT ANSWER - *All costs of construction within 5' of building
line*
- *Bldg. construction cost*: structure, exterior cladding, finishes, materials, MEP systems
- *GC fees*: Overhead (General + Project) + Profit


General Overhead - CORRECT ANSWER - *Office related costs*
- Business insurance/ wages/ rent/ office supplies/ legal expenses/ recurring/ advertising