Practice Test

True or False: The selection of the delivery method and contract structure can impact the risks, costs, and timeline of a project.

  • True
  • False

Answer: True

Explanation: The selection of delivery method and contract structure can significantly influence how project risks are shared, how costs are calculated, and the project schedule. They can also determine the roles and responsibilities of the project team.

When selecting a delivery method, which of the following factors should be considered?

  • a) Complexity and size of the project
  • b) Project timeline
  • c) Project budget
  • d) All of the above

Answer: d) All of the above

Explanation: The selection of a delivery method should consider multiple factors, including the size and complexity of the project, the timeline, and the budget.

Which is a type of construction contract structure where the owner carries the project risk?

  • a) Lump sum
  • b) Cost plus
  • c) Guaranteed maximum price
  • d) Unit price

Answer: a) Lump sum

Explanation: In a lump sum contract, the contractor agrees to complete the project for a fixed, lump-sum price, which means the owner carries the risk if the project exceeds that agreed amount.

True or False: The design-bid-build method is a project delivery method where the project owner hires a single entity to manage both design and construction.

  • True
  • False

Answer: False

Explanation: The Design-Bid-Build is a traditional project delivery method where the design and construction are handled by separate entities. In contrast, the design-build method involves one entity managing both design and construction.

Which delivery method typically results in the fastest project completion?

  • a) Design-Bid-Build
  • b) Design-Build
  • c) Construction Manager at Risk
  • d) Integrated Project Delivery

Answer: b) Design-Build

Explanation: In the design-build delivery method, design and construction overlap, which can significantly speed up the project timeline.

In what type of contract structure does the contractor get paid based on the actual costs of labor and materials plus a fee?

  • a) Lump Sum
  • b) Cost Plus
  • c) Guaranteed Maximum Price
  • d) Time and Materials

Answer: b) Cost Plus

Explanation: In a Cost Plus contract, the owner agrees to cover the actual costs of the project and also provides a fee to the contractor, typically as a percentage of the project’s cost.

True or False: In a time and materials contract, the owner assumes the risk of costs exceeding the budget.

  • True
  • False

Answer: True

Explanation: In a time and materials contract, the contractor is paid based on the actual cost of labor and materials, meaning the owner assumes the risk of costs exceeding the budget.

The Construction Manager at Risk delivery method is:

  • a) Single contracted
  • b) Dual contracted
  • c) Multi contracted
  • d) Not contracted

Answer: b) Dual contracted

Explanation: The Construction Manager at Risk method involves two separate contracts – one with the designer and one with the construction manager – hence it’s considered a dual contracted delivery method.

Choosing the right contract structure depends on:

  • a) The risk tolerance of the owner
  • b) The project schedule
  • c) The complexity of the project
  • d) All of the above

Answer: d) All of the above

Explanation: The selection of the right contract structure should take into account several factors, including the risk tolerance of the owner, the project schedule, and the complexity of the project.

True or False: An Integrated Project Delivery method involves collaboration between the owner, architect, and contractor from the beginning stages of the project.

  • True
  • False

Answer: True

Explanation: An Integrated Project Delivery facilitates collaboration between all key stakeholders from the outset, which can result in more efficient and effective project execution.

Interview Questions

What is a construction delivery method?

A construction delivery method is the comprehensive process used to take the project from its initial concept to its final completion. It includes design, planning, and construction processes.

What are the primary considerations while advising senior stakeholders on the selection of a construction delivery method?

The primary considerations should include the project’s scope, budget, timeline, quality requirements, risk allocation, and the level of control required by the owner/client.

Why is it crucial to choose an appropriate contract structure for a construction project?

An appropriate contract structure is crucial for defining the roles and responsibilities of parties, managing risks, and ensuring the smooth implementation and completion of the project. It also affects the project’s cost, quality, and time aspects.

What is a Design-Bid-Build (DBB) delivery method?

In the Design-Bid-Build delivery method, the owner contracts separately with a design team and a construction team. The design team completes the design before contractors bid on the construction work. The lowest bidder is usually awarded the project.

When is the Construction Manager at Risk (CMAR) delivery method advisable?

The CMAR method is advisable when the owner wants the contractor to assume the risk of adhering to the project’s budget and schedule. The construction manager is involved early in the design process, providing cost estimates and scheduling input.

How can a Design and Build delivery method be beneficial?

The Design and Build delivery method can be beneficial as it provides the owner with a single point of contact for design and construction. It can potentially streamline the process and reduce change orders.

What is a lump sum contract in construction?

A lump sum contract is a type of construction contract where the contractor agrees to complete the project for a fixed price. It provides a high level of cost certainty for the owner but places the risk of cost overruns on the contractor.

When is it advisable to use a cost-plus contract?

A cost-plus contract is advisable for projects where the scope is not fully defined at the outset, and there is room for changes during the construction phase. It provides for the payment of actual costs, purchases or other expenses directly related to the construction activity.

What are the risks associated with the selection of inappropriate delivery method or contract structure?

Risks can include project delays, cost overruns, litigation, substandard work quality, and potential failure of the project.

How can senior stakeholders mitigate risks associated with delivery methods and contract structures?

Senior stakeholders can mitigate risks by thorough planning, defining clear roles and responsibilities, keeping open communication lines, and regularly reviewing and updating risk mitigation strategies. It is also essential to adapt the delivery method and contract structure to the project’s specific needs.

What are the key factors to consider in making the decision between a lump sum and a cost-plus contract?

Key factors include the project’s scope clarity, the owner’s risk tolerance, and the need for cost certainty. In general, a lump sum contract provides more cost certainty but less flexibility, while a cost-plus contract allows for changes but with less cost control.

Before recommending a project delivery method, what should you ensure as a PMI Construction Professional?

As a PMI Construction Professional, you should ensure that you have a full understanding of the project’s requirements, stakeholder expectations, available resources, and an assessment of potential project risks.

What role does a good contract play in the project’s success?

A good contract establishes clear expectations, fosters collaboration, motivates performance, manages risks, and provides mechanisms for dispute resolution. It forms a foundation for the successful delivery of the project.

Can one delivery method or contract structure fit all types of construction projects?

No, the best delivery method or contract structure depends on the specifics of each project. Factors to consider include project complexity, timeline, budget, and owner’s desire for control.

Is it possible to change the construction delivery method or contract structure once the project has started?

It’s possible but usually not advisable as it can lead to legal issues, time delays, and additional costs. Any potential changes should be reviewed with legal counsel and must be agreed upon by all parties involved.

Leave a Reply

Your email address will not be published. Required fields are marked *