CCT CCT Contract Management & Procurement 2 — Questions and Answers
Question 1: What is a 'liquidated damages' clause in a construction contract?
- A penalty for material defects discovered after completion
- A pre-agreed daily dollar amount charged for late project delivery (Correct answer)
- A reimbursement to the contractor for owner-caused delays
- A lump sum payment for scope additions
Correct answer: A pre-agreed daily dollar amount charged for late project delivery
Liquidated damages are a contractually established daily rate the contractor pays to the owner for each day the project is delivered late.
Question 2: Which procurement strategy involves awarding a contract to the vendor offering the lowest compliant bid?
- Best Value Selection
- Sole Source Procurement
- Low-Bid Award (Correct answer)
- Negotiated Procurement
Correct answer: Low-Bid Award
A Low-Bid Award selects the contractor whose bid is the lowest among all responsive and responsible proposals meeting minimum requirements.
Question 3: What is the main advantage of using a Unit Price contract for construction work?
- It eliminates all contractor risk
- It allows payment based on actual quantities of work performed (Correct answer)
- It guarantees project completion on a fixed budget
- It removes the need for quantity surveys
Correct answer: It allows payment based on actual quantities of work performed
Unit Price contracts pay the contractor for each measured unit of work completed, making them ideal when quantities cannot be precisely estimated upfront.
Question 4: In procurement, what does 'sole source justification' mean?
- Awarding a contract after a competitive bidding process
- Documenting why only one vendor can satisfy the requirement (Correct answer)
- Splitting a large contract among multiple suppliers
- Requiring all bids to be submitted from a single source
Correct answer: Documenting why only one vendor can satisfy the requirement
Sole source justification is written documentation explaining why competition is not feasible and only one specific vendor can meet the project's unique needs.
Question 5: A contractor submits a claim for extra work not covered in the original contract. What should a cost technician verify first?
- The contractor's profit margin on prior projects
- Whether an approved change order exists authorizing the extra work (Correct answer)
- The subcontractor's insurance limits
- The owner's payment history
Correct answer: Whether an approved change order exists authorizing the extra work
Before processing a claim for extra work, the cost technician must confirm a valid change order was issued authorizing the scope and cost addition.
Question 6: What is the function of a bid bond in competitive procurement?
- It guarantees payment to subcontractors if the prime defaults
- It ensures the low bidder will enter into the contract at the bid price (Correct answer)
- It covers warranty repairs after project completion
- It protects the contractor against owner non-payment
Correct answer: It ensures the low bidder will enter into the contract at the bid price
A bid bond is a surety guarantee that the winning bidder will execute the contract at the submitted price, protecting the owner from bid withdrawal.
CCT CCT Contract Management & Procurement 2
What is a 'liquidated damages' clause in a construction contract?