A complex renovation project requires specialized equipment available from only one supplier. How should this affect the equipment cost estimate?
Correct Answer
C) Obtain actual quotes from the supplier
When specialized equipment is available from only one supplier, actual quotes are essential because standard databases may not reflect the monopoly pricing or unique specifications.
Why This Is the Correct Answer
When specialized equipment is sourced from a single supplier, standard cost database rates are unreliable because those rates aggregate market-wide pricing from competitive environments. A sole-source supplier faces no competitive pressure and may charge premium rates based on scarcity, unique specifications, or monopoly positioning. Obtaining actual quotes directly from that supplier gives the estimator real, project-specific pricing that reflects current market conditions and the exact equipment configuration required, eliminating the guesswork that leads to budget overruns or failed bids.
Why the Other Options Are Wrong
Option A: Add a 10% markup to standard rates
Applying a blanket 10% markup to standard rates is arbitrary and may significantly under- or over-estimate the actual cost. Standard rates may already be 20-40% below sole-source pricing, making a 10% adjustment insufficient. This approach avoids the necessary due diligence of contacting the only available supplier.
Option B: Estimate based on similar equipment costs
Estimating based on 'similar' equipment costs assumes functional equivalence where none may exist. Specialized equipment often has unique capabilities that justify higher costs, and using analogous pricing can produce estimates that bear little resemblance to actual procurement costs.
Option D: Use standard equipment rates from cost databases
Standard equipment rates from cost databases reflect average competitive-market pricing and are inappropriate for sole-source situations. These databases derive rates from environments where multiple suppliers compete, which fundamentally does not apply when only one supplier exists.
Memory Technique
ONE supplier = ONE source of truth: when only one vendor can supply the equipment, only one action makes sense — get a real quote from that vendor.
More NASCLA Questions
Which AIA document contains the general conditions that govern the rights and responsibilities of all parties in a construction contract?
A construction company has direct labor costs of $85,000, direct materials of $120,000, and overhead costs of $45,000 for a project. What is the total job cost?
What is the primary purpose of job cost accounting in construction?
A construction company has current assets of $350,000 and current liabilities of $280,000. What is the company's working capital?
In CSI MasterFormat, which division covers earthwork and site preparation?
In a mechanical drawing, what does 'CFM' typically measure?
In CSI MasterFormat Division 08, which of the following would typically be included?
On a mechanical plan, what does the symbol 'RTU' typically indicate?
What is the minimum preheat temperature for welding ASTM A992 steel when the ambient temperature is 15°F?
A general contractor's balance sheet shows total assets of $850,000, current liabilities of $320,000, and long-term debt of $180,000. What is the company's equity?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
An excavation in Type A soil is 8 feet deep. What is the steepest allowable slope angle from horizontal without requiring additional protective systems?
Next Question
When must Safety Data Sheets (SDS) be readily accessible to employees according to OSHA's Hazard Communication Standard?