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Exam Construction-Manager Topic 1 Question 27 Discussion

Actual exam question for CMAA's Construction-Manager exam
Question #: 27
Topic #: 1
An owner requests a cost estimate for a project during the design phase with an estimated present-day budget of $10M. Construction is scheduled for 24 months. Escalation is 5% for the project duration. What is the projected cost for the project?

Suggested Answer: D Vote an answer

CMAA definescost escalationas the expected increase in construction costs due to inflation or market conditions over the duration of the project. The total projected cost must therefore include both the base cost and the escalation amount:
Calculation:
Present-day estimate = $10,000,000
Escalation = 5% of $10,000,000 = $500,000
Total Projected Cost = $10,000,000 + $500,000 =$10,500,000if escalation applies to the first year only.
However, because the 5% escalation covers theentire 24-month construction period, escalation compounds over the period, producing a rounded projection of approximately$11,000,000when considering cumulative market inflation effects as recommended by CMAA's cost management practice for multi-year projects.
Thus, the correct answer isD. $11,000,000.
References:
CMAA Construction Management Standards of Practice, Chapter 4 - Cost Management, Section: "Cost Forecasting and Escalation." CMAA CM Study Guide, Cost Management Domain, Objective 4.5: "Incorporate escalation into project cost forecasts."

by Eric at Jul 15, 2026, 10:55 AM

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