CCC Contract Management & Procurement Flashcards

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

Answer: Firm Fixed-Price (FFP)

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

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

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

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

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

Answer: Competitive sealed bidding (Invitation for Bid)

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

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

Answer: Front-loading or overbilling

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

What is retainage in construction contracts?

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

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

When evaluating a change order claim, a cost controller should first verify:

Answer: That the claimed work is outside the original contract scope

Confirming the work is outside the contractual scope of work is the prerequisite step before evaluating cost or schedule impacts of any change order.