Construction Contracts

Review Questions

1. What are the necessary parts of a construction contract?

a. Identification of the parties and the parties make a promise that constitutes an offer.

b. Both parties sign the contract indicating they understand and agree.

c. Both parties receive consideration and the parties have the legal authority to negotiate a contract.

d. All of the above

1. What are the necessary parts of a construction contract?

a. Identification of the parties and the parties make a promise that constitutes an offer.

b. Both parties sign the contract indicating they understand and agree.

c. Both parties receive consideration and the parties have the legal authority to negotiate a contract.

d. All of the above

2. The construction agreement is

a. Part of the contract documents which defines the relationships and obligations that exist between the owner and contractor.

b. Always written by a lawyer to cover the specific situation.

c. Must be on the A101 – Standard Form of Agreement Between Owner and Contractor.

d. Part of the contract documents which defines the relationship and obligations that exist between the owner and the design professional.

2. The construction agreement is

a. Part of the contract documents which defines the relationships and obligations that exist between the owner and contractor.

b. Always written by a lawyer to cover the specific situation.

c. Must be on the A101 – Standard Form of Agreement Between Owner and Contractor.

d. Part of the contract documents which defines the relationship and obligations that exist between the owner and the design professional.

3. Which best describes the tripartite relationship of the Owner, the Contractor and the A/E?

a. The Owner has a contract with the A/E who has a contract with the Contractor.

b. The Owner has a contract with the Contractor who also has a contract with the A/E.

c. The Contractor has a contract with the Owner who also has a contract with the A/E.

d. The Contractor has a contract with the A/E who also has a contract with the Owner.

3. Which best describes the tripartite relationship of the Owner, the Contractor and the A/E?

a. The Owner has a contract with the A/E who has a contract with the Contractor.

b. The Owner has a contract with the Contractor who also has a contract with the A/E.

c. The Contractor has a contract with the Owner who also has a contract with the A/E.

d. The Contractor has a contract with the A/E who also has a contract with the Owner.

4. Who is responsible for the technical sufficiency of the design and construction documents?

a. The Owner

b. The Contractor

c. The A/E

4. Who is responsible for the technical sufficiency of the design and construction documents?

a. The Owner

b. The Contractor

c. The A/E

5. In Competitive Bidding

a. The Owner is not required to select the lowest price for the project.

b. The Owner may select someone other than the lowest bidder on publicly funded projects.

c. The Owner negotiates the prices with the Contractors.

d. Bidding is open to any bidder demonstrating the financial ability to perform the work.

5. In Competitive Bidding

a. The Owner is required to select the lowest price for the project.

b. The Owner may select someone other than the lowest bidder on publicly funded projects.

c. The Owner negotiates the prices with the Contractors.

d. Bidding is open to any bidder demonstrating the financial ability to perform the work.

6. The Single Prime Contract

a. Is the most common form of construction contract.

b. Is the most complex type of contract to administer.

c. Is one in which the Owner contracts directly with the subcontractors.

d. Is where the owner divides the work between several contractors.

6. The Single Prime Contract

a. Is the most common form of construction contract.

b. Is the most complex type of contract to administer.

c. Is one in which the Owner contracts directly with the subcontractors.

d. Is where the owner divides the work between several contrators.

7. In the Multiple Prime Contract

a. The Contractor has an agreement with the Owner and with the A/E.

b. The A/E will prepare a separate set of bidding documents for each contract.

c. The contracts are usually negotiated.

d. Is not normally used in “fast track” construction.

7. In the Multiple Prime Contract

a. The Contractor has an agreement with the Owner and with the A/E.

b. The A/E will prepare a separate set of bidding documents for each contract.

c. The contracts are usually negotiated.

d. Is not normally used in “fast track” construction.

8. When the Owner has the A/E “within house”

a. The construction contract type is called “design – build”.

b. The construction contract type is called “construction management”.

c. The construction contract type is called “owner – builder”.

d. The construction contract type is called “subcontract”

8. When the Owner has the A/E “within house”

a. The construction contract type is called “design – build”.

b. The construction contract type is called “construction management”.

c. The construction contract type is called “owner – builder”.

d. The construction contract type is called “subcontract”

9. Lump Sum Contracts

a. Are negotiated between the owner and the contractor on competitively bid projects.

b. Are where the contractor is reimbursed for actual costs of labor and materials.

c. Are typically used on engineering projects.

d. Are the simplest method of stating the cost of an entire contract.

9. Lump Sum Contracts

a. Are negotiated between the owner and the contractor on competitively bid projects.

b. Are where the contractor is reimbursed for actual costs of labor and materials.

c. Are typically used on engineering projects.

d. Are the simplest method of stating the cost of an entire contract.

10. The construction subcontracts

a. Are the contracts between the owner and the contractor.

b. Are the contracts between the owner and the construction manager.

c. Are the contracts between the contractor and the A/E.

d. Are the contracts between the contractor and the subcontractors.

10. The construction subcontracts

a. Are the contracts between the owner and the contractor.

b. Are the contracts between the owner and the construction manager.

c. Are the contracts between the contractor and the A/E.

d. Are the contracts between the contractor and the subcontractors.

11. A disadvantage of using standardized agreement forms is:

a. Familiarity of the forms.b. Uniformity of terminology.c. Legal precedents interpreting the

documents.d. May not meet specific project

requirements.e. Recognized customs resulting from

longtime use.

11. A disadvantage of using standardized agreement forms is:

a. Familiarity of the forms.b. Uniformity of terminology.c. Legal precedents interpreting the

documents.d. May not meet specific project

requirements.e. Recognized customs resulting from

longtime use.

12. The Agreement:

a. Establishes how the contract will be administered.

b. Provides for requirements unique to a specific project.

c. Protects the labor force if the Contractor fails to meet his obligations.

d. Defines relationships and obligations between the Owner and the Contractor.

12. The Agreement:

a. Establishes how the contract will be administered.

b. Provides for requirements unique to a specific project.

c. Protects the labor force if the Contractor fails to meet his obligations.

d. Defines relationships and obligations between the Owner and the Contractor.

13. The contractual relationship governed by the Conditions of the Contract is between:

a. Owner and Contractor.

b. Architect/Engineer and Contractor.

c. Owner and Subcontractors.

d. Architect/Engineer and Subcontractors.

13. The contractual relationship governed by the Conditions of the Contract is between:

a. Owner and Contractor.

b. Architect/Engineer and Contractor.

c. Owner and Subcontractors.

d. Architect/Engineer and Subcontractors.

14. What contract type is usually the simplest type of construction contract to administer?

a. Single-Prime.

b. Multiple-Prime.

c. Turn-Key.

d. Competitive Bidding.

14. What contract type is usually the simplest type of construction contract to administer?

a. Single-Prime.

b. Multiple-Prime.

c. Turn-Key.

d. Competitive Bidding.

15. Direct selection or negotiated contract method:

a. Is generally allowed for public sector projects.

b. Is used when the Architect hires the Contractor.

c. Does not involve the method of payment.

d. Usually is used by the Owner with advice from the A/E.

15. Direct selection or negotiated contract method:

a. Is generally allowed for public sector projects.

b. Is used when the Architect hires the Contractor.

c. Does not involve the method of payment.

d. Usually is used by the Owner with advice from the A/E.

16. The types of contracts include all of the following EXCEPT:

a. Project Management

b. Design/Build

c. Turn-Key

d. Owner/Builder

e. Construction Management

16. The types of contracts include all of the following EXCEPT:

a. Project Management

b. Design/Build

c. Turn-Key

d. Owner/Builder

e. Construction Management

17. In a Design/Build project, there is a contractual relationship established between:

a. The Owner and single party; typically a Contractor associated with the A/E.

b. The A/E and a single party; typically a Contractor associated with an Owner.

c. The Owner and several other separate parties; typically various subcontractors.

d. The A/E and an Owner directly.

17. In a Design/Build project, there is a contractual relationship established between:

a. The Owner and single party; typically a Contractor associated with the A/E.

b. The A/E and a single party; typically a Contractor associated with an Owner.

c. The Owner and several other separate parties; typically various subcontractors.

d. The A/E and an Owner directly.

18. For public sector projects, which method is normally followed for contract award?

a. Bidding to a pre-selected group with contract award to the lowest bidder(s).

b. Competitive bidding.

c. Negotiated contracts with pre-approved bidders.

d. Direct selection.

18. For public sector projects, which method is normally followed for contract award?

a. Bidding to a preselected group with contract award to the lowest bidder(s).

b. Competitive bidding.

c. Negotiated contracts with pre-approved bidders.

d. Direct selection.

19. The Construction Manager is normally hired by:

a. The A/E

b. The Owner

c. The A/E and Owner

d. Public agencies

19. The Construction Manager is normally hired by:

a. The A/E

b. The Owner

c. The A/E and Owner

d. Public agencies

20. The form of contract usually most difficult to administer during construction is:

a. Multiple prime contracts

b. Single Contract

c. Procurement contract

d. Negotiated contract

20. The form of contract usually most difficult to administer during construction is:

a. Multiple prime contracts

b. Single Contract

c. Procurement contract

d. Negotiated contract

21. In the single-prime contract situation, the Owner has a contractual relationship with which of the following:

a. A/E

b. Contractor and Subcontractors

c. Contractor and A/E

d. Contractor

21. In the single-prime contract situation, the Owner has a contractual relationship with which of the following:

a. A/E

b. Contractor and Subcontractors

c. Contractor and A/E

d. Contractor

22. Multiple-prime contracts are normally a part of:

a. Turn-key construction

b. Phased Construction

c. Long duration construction projects

d. Fast track construction

22. Multiple-prime contracts are normally a part of:

a. Turn-key construction

b. Phased Construction

c. Long duration construction projects

d. Fast track construction

23. Typically, a Construction Manager is hired by the Owner to:

a. Perform the construction

b. Oversee and administer the construction

c. Instruct the A/E during the design phase of a project

d. Assist the Owner during the bidding phase of the project and to perform the construction.

23. Typically, a Construction Manager is hired by the Owner to:

a. Perform the construction

b. Oversee and administer the construction

c. Instruct the A/E during the design phase of a project

d. Assist the Owner during the bidding phase of the project and to perform the construction.

24. A cost-plus-fee may include:

a. Cost of material plus an additional fee for overhead and profit.

b. A guaranteed maximum price.

c. Shared savings.

d. Incentives for early completion.

e. All of the above.

24. A cost-plus-fee may include:

a. Cost of material plus an additional fee for overhead and profit.

b. A guaranteed maximum price.

c. Shared savings.

d. Incentives for early completion.

e. All of the above.

25. The objective of the competitive bidding process is:

a. To ensure that all qualified bidders may submit bids on public work projects.

b. To ensure that the public works contracts are awarded to the lowest bidders.

c. To ensure that the intent of the governing public laws are maintained in the awarding of contracts.

d. To ensure that the cost of the project is reasonable and consistent with the prevailing conditions in the construction industry.

25. The objective of the competitive bidding process is:

a. To ensure that all qualified bidders may submit bids on public work projects.

b. To ensure that the public works contracts are awarded to the lowest bidders.

c. To ensure that the intent of the governing public laws are maintained in the awarding of contracts.

d. To ensure that the cost of the project is reasonable and consistent with the prevailing conditions in the construction industry.

26. A unit price contract is used when:

a. Extent of work cannot be fully determined or where actual quantities cannot be accurately calculated.

b. Extent of work is know, but the Owner desires a unit cost for portions of the work.

c. It is anticipated that bidders will not examine soil bearing reports prior to submitting bid.

d. Bidding quantities of equipment.

26. A unit price contract is used when:

a. Extent of work cannot be fully determined or where actual quantities cannot be accurately calculated.

b. Extent of work is know, but the Owner desires a unit cost for portions of the work.

c. It is anticipated that bidders will not examine soil bearing reports prior to submitting bid.

d. Bidding quantities of equipment.

Answers1. d2. a3. c4. c5. d6. a7. b8. c9. d10. d11. d12. d13. a

14. a15. d16. c17. a18. b19. b20. a21. c22. d23. b24. e25. d26. a