,The contractor has a lump sum contract for $5 million. The actual cost is $4.6 million. The
owner should:
A. Start a new negotiation
B. Pay the contractor $5 million
C. Pay the contractor $4.6 million
D. Split the difference and pay $4.8 million
Correct answer: B. Pay the contractor $5 million
In the construction industry, which legal entity is often a temporary arrangement?
A. Joint venture
B. Sole proprietorship
C. Limited liability corporation
D. Partnership
Correct answer: A. Joint venture
Which of the following is NOT an attribute of a joint venture?
A. Exists for a fixed period of time defined by the duration of a project
B. Joint ventures are not considered legal entities therefore contracts must be signed by all
members
C. Owner signs a single contract with the joint venture even though it includes multiple
companies
D. Gathers financial and technical resources of two or more companies for a project
Correct answer: B. Joint ventures are not considered legal entities therefore contracts must
be signed by all members
,Which of the following contract types is best used if the scope is well defined but the quantities
of material are not?
A. Unit price
B. Lump sum
C. Cost plus with GMP
D. Cost plus
Correct answer: A. Unit price
What is the five-step process of initiating a project?
A. Advertise, Bid opening, Award contract, Sign contract, Notice to proceed
Correct answer: Advertise → Bid opening → Award contract → Sign contract → Notice to
proceed
Who establishes the need for a new construction project?
A. Owner
B. Contractor
C. Architect
D. Engineer
Correct answer: A. Owner
Measurement of completed units on site is the basis for payment in unit price contracts.
A. True
B. False
Correct answer: A. True
An advantage of the design/build approach is that construction can begin before design is 100%
complete.
, A. True
B. False
Correct answer: A. True
When assessing the risks applicable to a project, one must also look to the owner organization
and the manner in which decision-making occurs.
A. True
B. False
Correct answer: A. True
Which of the following is NOT a valid attribute of a proprietorship?
A. No separation between individual and firm assets
B. No separate taxation of the company
C. Creditors cannot come after personal property of the owner
D. Credit is limited by personal assets of the owner
Correct answer: C. Creditors cannot come after personal property of the owner
Which of the following legal forms of business organization is perpetual?
A. Sole proprietorship
B. Corporation
C. Partnership
D. All of the above
Correct answer: B. Corporation
In which delivery method is the construction administrator most like a consultant?
A. Integrated project delivery
B. Construction Management at Risk
owner should:
A. Start a new negotiation
B. Pay the contractor $5 million
C. Pay the contractor $4.6 million
D. Split the difference and pay $4.8 million
Correct answer: B. Pay the contractor $5 million
In the construction industry, which legal entity is often a temporary arrangement?
A. Joint venture
B. Sole proprietorship
C. Limited liability corporation
D. Partnership
Correct answer: A. Joint venture
Which of the following is NOT an attribute of a joint venture?
A. Exists for a fixed period of time defined by the duration of a project
B. Joint ventures are not considered legal entities therefore contracts must be signed by all
members
C. Owner signs a single contract with the joint venture even though it includes multiple
companies
D. Gathers financial and technical resources of two or more companies for a project
Correct answer: B. Joint ventures are not considered legal entities therefore contracts must
be signed by all members
,Which of the following contract types is best used if the scope is well defined but the quantities
of material are not?
A. Unit price
B. Lump sum
C. Cost plus with GMP
D. Cost plus
Correct answer: A. Unit price
What is the five-step process of initiating a project?
A. Advertise, Bid opening, Award contract, Sign contract, Notice to proceed
Correct answer: Advertise → Bid opening → Award contract → Sign contract → Notice to
proceed
Who establishes the need for a new construction project?
A. Owner
B. Contractor
C. Architect
D. Engineer
Correct answer: A. Owner
Measurement of completed units on site is the basis for payment in unit price contracts.
A. True
B. False
Correct answer: A. True
An advantage of the design/build approach is that construction can begin before design is 100%
complete.
, A. True
B. False
Correct answer: A. True
When assessing the risks applicable to a project, one must also look to the owner organization
and the manner in which decision-making occurs.
A. True
B. False
Correct answer: A. True
Which of the following is NOT a valid attribute of a proprietorship?
A. No separation between individual and firm assets
B. No separate taxation of the company
C. Creditors cannot come after personal property of the owner
D. Credit is limited by personal assets of the owner
Correct answer: C. Creditors cannot come after personal property of the owner
Which of the following legal forms of business organization is perpetual?
A. Sole proprietorship
B. Corporation
C. Partnership
D. All of the above
Correct answer: B. Corporation
In which delivery method is the construction administrator most like a consultant?
A. Integrated project delivery
B. Construction Management at Risk
