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Question asks what is the additional PROJECT COST. Project Cost is the total funds needed to complete the project (the Owner's costs), and shall include the cost of the labor to complete the work, and also include the cost of any additional design work, construction, etc.

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Thanks Valerie,

I can accept that they are asking for the owners cost ( but just to clarify this wouldn’t include cost of any construction as this is the Architect’s fees, not the Cost of Work) , but I still don’t understand why the question is asking you to multiply the billing rate by the net multiplier to get total cost increase. This has to be an error as the formula to calculate billable rate is direct salary expense x the net multiplier.

• Billable rate = amount we charge the customer. Billable rate = 50.00 (given).
Net multiplier of 3.05 means the firm needs \$3.05 of net revenue for each \$1.00 of direct labor spent on project to cover project labor, overhead and profit. Net multiplier = 3.05 (given).
Additional hours = 240 (given).
Additional project cost to owner = Billable rate X Number of additional hours = 50.00 × 240 = 12,000.
In NCARB example Hourly rate = 50.00 / 3.05 (and not 50.00 as shown in NCARB calculation). 36,600 answer is wrong.

• Valerie,

Yes, thanks for confirming. I am assuming that they mis-worded the question by saying “billing rate”. If they had said, “direct labor rate of \$50 per hour”, the solution they gave would be correct. Hopefully NCARB will make the correction…

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i think you might be overthinking it. if they give one multiplier, i just use that, you don't really have to wonder "is that the right multiplier?" if multiple multipliers were given, for example a break-even vs a billable multiplier, then u can spend more time thinking about it. Makes my life much easier.

Also, sometimes when you spend a lot of time using one study material, you get used to their vocabulary on some of these things. So when u read NCARB questions it sounds foreign. I struggle with that too. Which is why I'm really glad NCARB now have their own Practice exams.

• Erin,

i agree with you, and I came up with the same answer you did.  The multiplier of 3.05 means their average staffer that they are billing out is getting paid \$50/3.05 = \$16.39/hr.

I don’t see how you could lose more money than what you would’ve been able to bill out for the hours.  Someone made a mistake.

Hope this helps!

Rebekka O'Melia, Registered Architect, NCARB, B. Arch, M. Ed, Step UP,  Step UP ARE 5.0 Courses