CMGT 3500 Final
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1. List several measures that describe the size of the construction industry: -
accounts for 2/3 of $1-trillion in expenditures per year in new construction
- constitutes about 5% of GDP
-6% (7.5 mill) of workers of the industrial workforce is employed directly in the construction industry
-the construction industry represents the largest single production activity in the American economy
2. Under what conditions might the funding of public construction projects be
particularly high?: periods of recession
3. why is the construction industry referred to as an easy entry and easy exit
industry?: high growth rate in construction
low capital requirements
little absolute cots or profit advantage for established firms
most states have no rigid licensing requirements or fees
4. What are the ramifications of the cyclic tendencies experienced in the con-
struction industry?: some firms exit the industry without the benefit of choice, they fail.
periods of recession, weak local economy , competition increases, causing profit margins to decrease which results in
failure of construction companies
5. Contrast the financing of public versus private construction projects?: private:
funded through:
-expenditure of existing capital
-direct loans from outside creditors
-sale of fixed assets
-issuance of additional shares of stock/corporate bonds
-endowments
public:
funded through:
, CMGT 3500 Final
Study online at https://quizlet.com/_i398do
-appropriations from annual operating budgets (general taxation)
-special taxation assessments for specific purposes
-bond issues for specific purposes
-endowments
6. What are some advantages and disadvantages of the general contract ap-
proach? (design-bid-build): Advantages:
-gives the owner a firm idea of the final costs of the project
-GC has skills that should reduce cost to owner
-GC maintains a staff of trained supervisors
-clearly defined roles for each contracting party
disadvantages:
-often extends project duration
-owner does not have an agent involved in contractual arrangements
-leads to tight bids and small profit margins
-exposes owner a greater probability to claims
7. Discuss the criticisms that have been made of public agencies performing
construction services by the self-performance or force account method: -instances
in which the public owner submitted a bid on competitively bid projects, owner is frequently the low bidder
-other cases; owner does not permit private contractors to submit bids- the contractors state they're placed at an unfair
disadvantage
-say that owners do not charge properly for the costs of owning and operating heavy equipment
8. What type of project might be ideally suited for the design-build or de-
sign-construct method?: popular in constructing large, industrial type projects
no extensive design on which to compute a bid
it is possible to begin construction before completion of the design for the project
9. What are the advantages of using the professional construction management
approach?: to the owners benefit
CM gives the owner a GMP that the project cost will not exceed
, CMGT 3500 Final
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permits flexibility for changing the project as the design evolves
fast-tracking projects are good for this approach
10. Which types of contractual arrangements lend themselves to fast-tracking?-
: projects to be delivered quickly
11. what general rule is followed when one party to a contract wants to cancel
the contract, even though the second party has already performed a portion
of or all the obligations under the contract?: If the different parties cannot amicably resolve any
dispute, a lawsuit will be filed and litigation will begin and a court decision will legally come up with an outcome.
12. Give a construction example of a unilateral contract, and a bilateral or a
mutual contract.: unilateral: a one-sided contract in that only one of the contracting parties makes a promise,
while the other party exchanges something other than a promise, (performance)
bilateral: an agreement created by mutual promises made by the contracting parties. each party plays two roles:
promisor and promisee. most construction projects are bilateral
13. Give an example of an implied contract in which estoppel will prevent one
party from canceling the contract: a contract may be created by what a party does or says, without a
written document, and that party is then "estopped" from denying that a contract exists.
14. Discuss the significance of a bid being an offer rather than an acceptance-
: offer: made when one person signifies to another person a willingness to enter into a binding contract on certain
specified terms.
once an offer is made, it is revocable as long as it has not been accepted
acceptance creates the contract
15. What is the relationship between eminent domain and condemnation?: emi-
nent domain is the right of the federal government or state to take possession of private property and appropriate it
for public use.
condemnation is the exercise of eminent domain
16. Describe the major differences between a right-of-way and an easement: -
right-of-way: a tract of land, usually consisting of a series of connected parcels of property, that is used for the operation
of a highway or public utility. owned by public or private firms
Study online at https://quizlet.com/_i398do
1. List several measures that describe the size of the construction industry: -
accounts for 2/3 of $1-trillion in expenditures per year in new construction
- constitutes about 5% of GDP
-6% (7.5 mill) of workers of the industrial workforce is employed directly in the construction industry
-the construction industry represents the largest single production activity in the American economy
2. Under what conditions might the funding of public construction projects be
particularly high?: periods of recession
3. why is the construction industry referred to as an easy entry and easy exit
industry?: high growth rate in construction
low capital requirements
little absolute cots or profit advantage for established firms
most states have no rigid licensing requirements or fees
4. What are the ramifications of the cyclic tendencies experienced in the con-
struction industry?: some firms exit the industry without the benefit of choice, they fail.
periods of recession, weak local economy , competition increases, causing profit margins to decrease which results in
failure of construction companies
5. Contrast the financing of public versus private construction projects?: private:
funded through:
-expenditure of existing capital
-direct loans from outside creditors
-sale of fixed assets
-issuance of additional shares of stock/corporate bonds
-endowments
public:
funded through:
, CMGT 3500 Final
Study online at https://quizlet.com/_i398do
-appropriations from annual operating budgets (general taxation)
-special taxation assessments for specific purposes
-bond issues for specific purposes
-endowments
6. What are some advantages and disadvantages of the general contract ap-
proach? (design-bid-build): Advantages:
-gives the owner a firm idea of the final costs of the project
-GC has skills that should reduce cost to owner
-GC maintains a staff of trained supervisors
-clearly defined roles for each contracting party
disadvantages:
-often extends project duration
-owner does not have an agent involved in contractual arrangements
-leads to tight bids and small profit margins
-exposes owner a greater probability to claims
7. Discuss the criticisms that have been made of public agencies performing
construction services by the self-performance or force account method: -instances
in which the public owner submitted a bid on competitively bid projects, owner is frequently the low bidder
-other cases; owner does not permit private contractors to submit bids- the contractors state they're placed at an unfair
disadvantage
-say that owners do not charge properly for the costs of owning and operating heavy equipment
8. What type of project might be ideally suited for the design-build or de-
sign-construct method?: popular in constructing large, industrial type projects
no extensive design on which to compute a bid
it is possible to begin construction before completion of the design for the project
9. What are the advantages of using the professional construction management
approach?: to the owners benefit
CM gives the owner a GMP that the project cost will not exceed
, CMGT 3500 Final
Study online at https://quizlet.com/_i398do
permits flexibility for changing the project as the design evolves
fast-tracking projects are good for this approach
10. Which types of contractual arrangements lend themselves to fast-tracking?-
: projects to be delivered quickly
11. what general rule is followed when one party to a contract wants to cancel
the contract, even though the second party has already performed a portion
of or all the obligations under the contract?: If the different parties cannot amicably resolve any
dispute, a lawsuit will be filed and litigation will begin and a court decision will legally come up with an outcome.
12. Give a construction example of a unilateral contract, and a bilateral or a
mutual contract.: unilateral: a one-sided contract in that only one of the contracting parties makes a promise,
while the other party exchanges something other than a promise, (performance)
bilateral: an agreement created by mutual promises made by the contracting parties. each party plays two roles:
promisor and promisee. most construction projects are bilateral
13. Give an example of an implied contract in which estoppel will prevent one
party from canceling the contract: a contract may be created by what a party does or says, without a
written document, and that party is then "estopped" from denying that a contract exists.
14. Discuss the significance of a bid being an offer rather than an acceptance-
: offer: made when one person signifies to another person a willingness to enter into a binding contract on certain
specified terms.
once an offer is made, it is revocable as long as it has not been accepted
acceptance creates the contract
15. What is the relationship between eminent domain and condemnation?: emi-
nent domain is the right of the federal government or state to take possession of private property and appropriate it
for public use.
condemnation is the exercise of eminent domain
16. Describe the major differences between a right-of-way and an easement: -
right-of-way: a tract of land, usually consisting of a series of connected parcels of property, that is used for the operation
of a highway or public utility. owned by public or private firms
