Estimating Practice Exam

What factor is significant in determining the breakdown of recaps?

1. Company policy

2. Type of contract

3. Experience of estimators

4. Market trends

The correct answer is: Type of contract

The type of contract is significant in determining the breakdown of recaps because different contracts can have varied stipulations and structures that influence how costs are estimated and reported. For instance, fixed-price contracts generally require a detailed breakdown of costs to ensure profitability and accountability, while time and materials contracts may have more flexibility in how costs are recorded since they bill based on actual expenses incurred. When dealing with recaps, which summarize costs associated with different aspects of a project, the nature of the contract dictates what information needs to be compiled and how detailed the breakdown should be. For example, certain contracts may require a strict alignment with project deliverables or milestones, directly affecting how recaps are structured to conform to those requirements. Understanding the contract design can also influence how risk is assessed and managed within the recap process, making it a critically important factor for estimators.