ARE Handbook  PjM Sample Item 9
ARE 5.0 Handbook  PjM  Section 4
Sample Item 9 on page 45  Calculate the increase in labor and materials compared to the current project budget.
To my understanding, the answer provided on page 46 is incorrect. The issue relates to calculating profit. See below for the question and rationale.
NCARB's Answer  $19,691
My Answer $20,900
The discrepancy relates to Step 3.
NCARB calculates the total cost by multiplying the construction cost by 1.1 (i.e., break even % + target profit %). Instead, I calculated the total cost by dividing the construction cost by .9 (i.e., inverse target profit percentage).
To my understanding, the multiplication method used by NCARB represents a markup of 10%...not a profit of 10%.
Any help or additional insight would be very much appreciated!
Refer to AHPP Chapters 7.3 & 7.3 regarding fee and profit calculations.

I think this question and answer has been discussed several times here.
Yes, you are correct. You can search for it in this forum.
Gang Chen, Author, AIA, LEED AP BD+C (GreenExamEducation.com)

Gang Chen 
I did locate one other thread about the question, but nobody had responded to the author  so I appreciate your response, confirming the calculation method.
On an unrelated note, I coincidentally have a copy of your LEED GA (V3.0) Exam Guide sitting next to me at my desk. It was lent by a friend, as I anticipate sitting for the LEED exam after completing the ARE. Does the V3.0 book still represent a sufficient guide for passing the current LEED exam, or would I be better served by a newer edition? I'd appreciate any advice you may have.

Hello,
I am the author, no response from NCARB in 10+ months.
LEED BD+C question: LEED 3 edition is totally outdated.
Please refer to https://www.usgbc.org/credits  absolutely FREE credit library for all certifications. You DO NOT need to buy any additional study materials such as textbooks, etc. in addition to online reference. You DO need to
1) know the content
2) study the most important concepts (MPRs, ASHRAE, albedo, water reduction, runoff, brownfield, alt energy sources and systems, wetlands, parking calculations, commissioning, pilot, exemplary, and innovation credits, IPD)
3) study from the first sources (LEED credit library ONLY)
4) study for LEED GA and LEED BD+C at the same time, however, DO NOT take them on the same day. When you feel ready for BD+C, schedule GA.
The best LEED exam practice tests book (3 full length practice exams) by Togay Koralturk:
Also, check USGBC official website for interactive quizzes:
https://www.usgbc.org/education/sessions/2019practiceexam100leedapbdcquestions12143876
https://www.usgbc.org/education/sessions/practicetestleedapbdc8568336
Hope this helps.
Valerie Galchenko
LEED AP BD+C, ID+C

The changes are substantial. You should use the LEED v4 books. They are available at our website below.
Gang Chen, Author, AIA, LEED AP BD+C (GreenExamEducation.com)

I know I'm late to the game on this, but I'm going to push back on the answers that have been provided for the original post regarding the NCARB handbook question #46.
From an accounting standpoint, the 10% for contractor overhead and profit in this question IS describing markup, not margin (profit). Profit (margin) is a percentage of final revenue, not a percentage of costs. If they asked to include a figure for JUST 10% profit, then it would use the margin rule of dividing the dollar amount (cost) by the supplementary percentage of the profit percentage (10% profit = divide by .9). But, the question is grouping overhead and profit into a single metric for MARKUP here. The margin calculation described in my last sentence would already be figured into the 10% for overhead and profit. Only a portion of the 10% is for actual profit. To add to this, overhead is not typically calculated as a margin, it is a markup for costs related to delivering a service at a certain price. Overhead (and overhead rate) is a percentage of costs, not a percentage of revenue. Overhead is not solved for using margin, only profit is.
I've seen a lot of debate on questions like this, but this is how I understand it to work. ONLY profit is calculated by dividing by (1  target percentage).
Hope this makes sense (and that I'm correct in my interpretation here hahaha).
Please sign in to leave a comment.
Comments
6 comments