Answer to Question 1
The initial schedule is very similar to the estimate prepared by the
contractor. When the estimate is prepared, predictions will be made about how much
given items will cost. If the estimates are prepared judiciously, some items may
actually cost more but other items will cost less. The end result is that things average
out. The schedule is prepared with the same expectation, with some activities taking
longer that originally scheduled and others being completed in a shorter time.
An obvious variable that is impossible to predict with complete accuracy is the
weather. On sitework activities, an estimate might be made that the clearing will be
completed on a particular project in 12 working days. Perhaps an allowance was
included in the time estimate for rain. If no rain occurs, it might be possible to
complete the activity in 8 days. Of course, if very heavy rains plague the project for
two weeks, the project duration might extend to 20 days or more.
Answer to Question 2
C
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Present Value Formula: Amortization Schedule