CCC CCC Contract Management & Procurement 3

Question 1

What is the purpose of a Procurement Management Plan in cost control?

Accepted Answer

To define how contracts will be acquired, administered, and closed out throughout the project

Answer

The Procurement Management Plan governs the entire buy cycle — from make-or-buy decisions through contract closeout — ensuring cost controls are applied consistently.

Question 2

Liquidated damages (LD) clauses in contracts are designed to:

Accepted Answer

Pre-establish a reasonable measure of damages for schedule delays without requiring proof of actual loss

Answer

LDs provide a pre-agreed daily or weekly rate for delay damages, simplifying enforcement without costly litigation over actual losses.

Question 3

During contract closeout, a cost controller's primary financial task is to:

Accepted Answer

Reconcile all costs, release retainage, process final change orders, and close open purchase orders

Answer

Contract closeout requires full financial reconciliation — final invoicing, retainage release, PO closure, and confirmation that all costs are accounted for.

Question 4

A 'back-charge' in contract management refers to:

Accepted Answer

Costs incurred by one party due to another party's failure, billed back to the responsible party

Answer

Back-charges recover costs (e.g., cleanup, rework) that one party had to perform because another party failed to fulfill a contractual obligation.

Question 5

Which of the following best describes a 'not-to-exceed (NTE)' contract provision?

Accepted Answer

The contractor may bill actual costs up to a stated ceiling, beyond which all additional costs are borne by the contractor

Answer

An NTE cap protects the owner by establishing a ceiling cost while allowing flexibility for actual cost billing up to that limit.

CCC Practice Test

CCC Practice Test

CCC CCC Contract Management & Procurement 3