CCA Construction Billing and Payment Verification 2 — Questions and Answers
Question 1: A construction auditor reviewing a contractor's Application for Payment should compare the SOV line items to the:
- Owner's marketing budget
- Contract documents and approved change orders (Correct answer)
- Contractor's overhead allocation formula
- Insurance policy limits
Correct answer: Contract documents and approved change orders
Each SOV line item must be traceable to the original contract scope or an approved change order to confirm the billed amount is contractually authorized.
Question 2: When auditing a cost-plus contract, which cost is generally NOT allowable as a direct project cost?
- Site superintendent labor
- Contractor's home office general and administrative overhead beyond the agreed rate (Correct answer)
- Project-specific equipment rental
- Subcontractor invoices
Correct answer: Contractor's home office general and administrative overhead beyond the agreed rate
Under cost-plus contracts, home office G&A overhead is typically reimbursed at a fixed or negotiated rate and cannot be billed again as a direct cost.
Question 3: Which lien document does a construction auditor typically require before recommending release of final payment?
- Conditional lien waiver from the contractor
- Unconditional final lien waivers from the contractor and all subcontractors (Correct answer)
- Preliminary notice from suppliers
- Mechanics lien from the general contractor
Correct answer: Unconditional final lien waivers from the contractor and all subcontractors
Unconditional final lien waivers confirm that the contractor and all subcontractors have been paid in full and waive any future lien rights, protecting the owner.
Question 4: Front-loading a Schedule of Values refers to:
- Assigning values to early work items in excess of their actual cost to improve early cash flow (Correct answer)
- Completing the most expensive work first
- Scheduling the project's critical path at the beginning
- Overstating contingency reserves
Correct answer: Assigning values to early work items in excess of their actual cost to improve early cash flow
Front-loading inflates the value of early work items so the contractor collects more cash early in the project than costs actually incurred warrant.
Question 5: A construction auditor examining pay application backup should verify that stored material invoices include:
- The contractor's profit margin
- Evidence of ownership, insurance coverage, and physical location of the materials (Correct answer)
- Subcontractor bonding information
- Owner's financing documents
Correct answer: Evidence of ownership, insurance coverage, and physical location of the materials
Proper stored material documentation must confirm the owner has title to the materials, they are insured, and their storage location is identified.
Question 6: Under AIA Document G702, what percentage of the contract sum is the threshold above which the architect should withhold certification if disputed?
- There is no fixed percentage; disputed amounts are withheld on a case-by-case basis (Correct answer)
- 5%
- 10%
- 15%
Correct answer: There is no fixed percentage; disputed amounts are withheld on a case-by-case basis
AIA G702 requires the architect to withhold certification for any amount reasonably in dispute; there is no fixed percentage threshold—disputes are handled individually.
CCA Construction Billing and Payment Verification 2
A construction auditor reviewing a contractor's Application for Payment should compare the SOV line items to the: