Contract Administration and Legal Flashcards

What is the purpose of a Notice to Proceed (NTP) in construction?

Answer: It formally authorizes the contractor to begin work on a specified date

A Notice to Proceed is the owner's written authorization for the contractor to begin work, establishing the official project start date.

What is retainage in a construction contract?

Answer: A percentage of each payment withheld by the owner until project completion

Retainage is a portion (typically 5–10%) of each progress payment that the owner withholds until the project reaches substantial completion.

What type of construction contract pays the contractor for all actual project costs plus an agreed-upon fee or percentage?

Answer: Cost-plus contract

A cost-plus contract reimburses the contractor for verified project expenses and adds a fixed fee or percentage markup as profit.

What is the primary function of a surety in a construction surety bond?

Answer: To guarantee the contractor's performance or payment obligations to the owner

The surety is the third-party guarantor that promises to fulfill the contractor's obligations if the contractor defaults.

What is the purpose of a Request for Information (RFI) in construction?

Answer: To seek clarification on unclear contract documents or design details

An RFI is a formal written question submitted by the contractor to the architect or owner to resolve ambiguities or gaps in the project documents.

What does an indemnification clause in a construction contract typically require?

Answer: One party to protect and hold harmless another party from specified liabilities or claims

An indemnification clause obligates one party (usually the contractor) to defend and compensate the other party for claims arising from the indemnifying party's work.