NASCLA TEST 2024 QUESTIONS AND ANSWERS
Performance Bond - CORRECT ANSWER✅✅✅Guarantees that the contractor will
complete a contract with in its time frame and conditions
Payment Bonds - CORRECT ANSWER✅✅✅Guarantees subcontractors and suppliers that
they will be paid for work if they perform properly under a contract
Maintenance bond - CORRECT ANSWER✅✅✅Guarantees that for stated Typically one
year no defective workmanship or material will appear in the completed project
Completion bond - CORRECT ANSWER✅✅✅Provide assurance to the financial backers
have a construction project but it will be completed on time
Fidelity bond - CORRECT ANSWER✅✅✅Covers business owners for losses due to
dishonest act by there employees
Lien bond - CORRECT ANSWER✅✅✅Guarantees that liens cannot be placed against the
owners property by contractors for payment of service
Sub contractors bond - CORRECT ANSWER✅✅✅Protects the general contractor in the
event that subcontractors do not fully perform the contract and or pay for labor and materials
Bank letter of credit - CORRECT ANSWER✅✅✅Is not a Bond but is it cash guaranteed to
the owner it is not a guarantee of performance but can be converted to a payment to the owner by
a bank or lending institution
Bid bond - CORRECT ANSWER✅✅✅Guarantees that the contractor if awarded the job
will do the work at the submitted bid price enter into a contract with the owner and furnish the
required performance and payment bonds
, What is a bond - CORRECT ANSWER✅✅✅Bonds provide protection in the event that the
contractual obligation's are not met
Bond language - CORRECT ANSWER✅✅✅At a minimum Bond should contain the total
dollar amount length of the bond requirements for notice of the fact or lack of maintenance and
bond enforcement
Filing procedures - CORRECT ANSWER✅✅✅Construction law contractual relationships
govern the bond claims process the filing process as outlined in the bond
Project changes - CORRECT ANSWER✅✅✅Unless specifically outlined in the bonds
agreement the Surety company will not cover changes to the original contract in most cases
request for additional coverage must be made and the bonding company must be notified of the
contract changes
Payment in the event of default - CORRECT ANSWER✅✅✅In the event of default Surety
may provide additional finances arrange for a new contractor or hire subcontractors to complete
the work or pay out the amount of the bond
Miller act of 1935 - CORRECT ANSWER✅✅✅Current law requiring performance and
payment bond on a federal construction project value greater than $100,000
Miller act amounts - CORRECT ANSWER✅✅✅50% on contracts less than 1 million 40%
of contracts between one and 5 million 2.5 million payment bond for contracts in excess of 5
million
Little Miller act - CORRECT ANSWER✅✅✅Similar to the Miller act for public works
projects
Construction Industry payment protection act of 1999 - CORRECT
ANSWER✅✅✅Addendum to the miller act it's purpose is to improve payment bond
protections for persons who furnish labor or material for use on federal construction projects to
help subcontractors with adequate protection
Performance Bond - CORRECT ANSWER✅✅✅Guarantees that the contractor will
complete a contract with in its time frame and conditions
Payment Bonds - CORRECT ANSWER✅✅✅Guarantees subcontractors and suppliers that
they will be paid for work if they perform properly under a contract
Maintenance bond - CORRECT ANSWER✅✅✅Guarantees that for stated Typically one
year no defective workmanship or material will appear in the completed project
Completion bond - CORRECT ANSWER✅✅✅Provide assurance to the financial backers
have a construction project but it will be completed on time
Fidelity bond - CORRECT ANSWER✅✅✅Covers business owners for losses due to
dishonest act by there employees
Lien bond - CORRECT ANSWER✅✅✅Guarantees that liens cannot be placed against the
owners property by contractors for payment of service
Sub contractors bond - CORRECT ANSWER✅✅✅Protects the general contractor in the
event that subcontractors do not fully perform the contract and or pay for labor and materials
Bank letter of credit - CORRECT ANSWER✅✅✅Is not a Bond but is it cash guaranteed to
the owner it is not a guarantee of performance but can be converted to a payment to the owner by
a bank or lending institution
Bid bond - CORRECT ANSWER✅✅✅Guarantees that the contractor if awarded the job
will do the work at the submitted bid price enter into a contract with the owner and furnish the
required performance and payment bonds
, What is a bond - CORRECT ANSWER✅✅✅Bonds provide protection in the event that the
contractual obligation's are not met
Bond language - CORRECT ANSWER✅✅✅At a minimum Bond should contain the total
dollar amount length of the bond requirements for notice of the fact or lack of maintenance and
bond enforcement
Filing procedures - CORRECT ANSWER✅✅✅Construction law contractual relationships
govern the bond claims process the filing process as outlined in the bond
Project changes - CORRECT ANSWER✅✅✅Unless specifically outlined in the bonds
agreement the Surety company will not cover changes to the original contract in most cases
request for additional coverage must be made and the bonding company must be notified of the
contract changes
Payment in the event of default - CORRECT ANSWER✅✅✅In the event of default Surety
may provide additional finances arrange for a new contractor or hire subcontractors to complete
the work or pay out the amount of the bond
Miller act of 1935 - CORRECT ANSWER✅✅✅Current law requiring performance and
payment bond on a federal construction project value greater than $100,000
Miller act amounts - CORRECT ANSWER✅✅✅50% on contracts less than 1 million 40%
of contracts between one and 5 million 2.5 million payment bond for contracts in excess of 5
million
Little Miller act - CORRECT ANSWER✅✅✅Similar to the Miller act for public works
projects
Construction Industry payment protection act of 1999 - CORRECT
ANSWER✅✅✅Addendum to the miller act it's purpose is to improve payment bond
protections for persons who furnish labor or material for use on federal construction projects to
help subcontractors with adequate protection
