CCC CCC Contract Management & Procurement 1

Question 1

In cost control, which contract type places the greatest financial risk on the contractor?

Accepted Answer

Firm Fixed-Price (FFP)

Answer

Under a Firm Fixed-Price contract, the contractor bears all cost overrun risk since the price does not change regardless of actual costs incurred.

Question 2

What is the primary purpose of a contract baseline in cost control?

Accepted Answer

To define the initial agreed scope, schedule, and cost against which performance is measured

Answer

The contract baseline serves as the approved reference point for scope, schedule, and cost, enabling controllers to measure and report variances.

Question 3

Which procurement method is most appropriate when the scope of work is well-defined and price competition is desired?

Accepted Answer

Competitive sealed bidding (Invitation for Bid)

Answer

Competitive sealed bidding (IFB) is used when scope is clear, allowing award to the lowest responsive, responsible bidder.

Question 4

A cost controller reviewing a subcontract notices the subcontractor is billing for materials not yet delivered. This is an example of:

Accepted Answer

Front-loading or overbilling

Answer

Billing for materials not yet delivered is front-loading, which inflates early cash draws and distorts cost-to-complete projections.

Question 5

What is retainage in construction contracts?

Accepted Answer

A percentage of each progress payment withheld until project completion to ensure contract fulfillment

Answer

Retainage is typically 5–10% withheld from progress payments as security that the contractor will complete all punch-list items.

CCC Practice Test