CCA Construction Contract Types and Risk Management 5

Question 1

Under an Indefinite Delivery/Indefinite Quantity (IDIQ) contract, what is the owner's primary obligation to the contractor?

Accepted Answer

Guarantee a minimum quantity of work over the contract term

Answer

IDIQ contracts obligate the owner to order at least a guaranteed minimum quantity of work, beyond which the contractor must perform all ordered work up to the contract maximum.

Question 2

What is 'force majeure' in the context of a construction contract?

Accepted Answer

A provision excusing performance delays caused by unforeseeable events beyond the parties' control

Answer

Force majeure clauses excuse delays or non-performance caused by extraordinary events such as natural disasters, wars, or pandemics that are beyond either party's control.

Question 3

When auditing subcontractor invoices under a cost-plus prime contract, which cost is most commonly found to be unallowable?

Accepted Answer

Subcontractor home office overhead allocated to the project

Answer

Subcontractor home office overhead is frequently disallowed because it duplicates overhead already included in the prime contractor's fee or markup on subcontract costs.

Question 4

A construction contract's 'notice requirement' for claims is important because:

Accepted Answer

Failure to provide timely notice can waive or bar the contractor's right to additional compensation

Answer

Most contracts require prompt written notice of claim conditions so the owner can investigate; failing to give timely notice typically waives the contractor's right to pursue that claim.

Question 5

Which risk management tool assigns numerical probabilities to potential project risks and calculates an expected monetary value for each?

Accepted Answer

Quantitative risk analysis (Monte Carlo simulation)

Answer

Quantitative risk analysis techniques like Monte Carlo simulation use probability distributions and thousands of iterations to produce a range of possible cost and schedule outcomes.

(CCA) Certified Construction Auditor Practice Test

(CCA) Certified Construction Auditor Practice Test

CCA Construction Contract Types and Risk Management 5