Estimating Practice Exam

Using the price per unit estimating method can generate a rough estimate quickly, but the lack of accuracy will render it of little use in cost planning. True or False?

1. True

2. False

3. Sometimes true

4. Rarely true

The correct answer is: True

Using the price per unit estimating method indeed allows for quick estimates, which can be beneficial in the early phases of project planning when time is of the essence. However, this method typically relies on historical data and unit costs that may not account for the specific details of the current project. As a result, the estimates produced can be quite rough and may not accurately reflect the actual costs that will be incurred. This lack of precision can hinder effective cost planning since budget decisions and resource allocation may be based on estimates that are not sufficiently detailed or informed. Therefore, while the price per unit method is a useful tool for initial budgeting and assessment, its reliability diminishes significantly when accuracy is paramount, making it less suitable for comprehensive cost planning.