Project Costs - ARE 5.0 Handbook

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    Rebekka O'Melia

    Yes, I’d say the salvage value and residual value are the same. “Salvage value” is an accounting term. The entire equation is an accounting 101 thing. HTH!!

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    Elif Bayram

    Jennifer, you are right to complain about this issue, test takers must be referred to a source that explains cost related issues better, even it is an Accounting 101 book, since we are not accountants we should not be assumed to know the accounting terminology.
    However, I would suggest you using what you are given in the question and not to focus on that sample question in the Handbook so much.
    For example, if you are only given the initial cost only and expected life time of a product, don’t think about anything else, just divide the cost to time and that is the cost of that material/element per unit of that given time( per year usually) . If you are given an initial cost, a salvage value and time, then go with it. Like I said, just use your best judgement with what ever you are given. The terminology will vary from question to question and honestly I don’t think it matters once you understand the logic behind this type of questions. BUT, where ever you are going to exercise and learn about all this? I don’t know. I wish I could help more, sorry. But again, NCARB MUST point out a resource for cost questions. I know a lot of people are struggling with them.

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    Jennifer Schuler

    Thanks Elif! I think your completely right on the strategy. It took me a while to understand that but I finally passed PPD by only considering what the question is asking.

    I do hope to someday work with NCARB about the cost issues and hope they will try to improve for candidates sake. There are a LOT of candidates struggling. The NCARB resources related to cost and estimate by phase either do not exist or are so conflicting it’s absurd. Candidates should be able to research and learn this material from an approved resource.

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    Kristin Dillenburger

    NCARB has many different committees you can volunteer for, including a committee that deals solely with developing questions and such for the ARE. If you want to get more involved, reach out to them and see what's available. My time on the Think Tank was invaluable. It opened my eyes so much to what NCARB truly does. 

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