CCT CCT Procurement & Contract Management 1 — Questions and Answers
Question 1: Which contract type transfers the most financial risk to the contractor?
- Firm Fixed Price (Correct answer)
- Cost Plus Fixed Fee
- Time and Materials
- Cost Plus Incentive Fee
Correct answer: Firm Fixed Price
A Firm Fixed Price contract places maximum financial risk on the contractor since payment does not change regardless of actual costs.
Question 2: What is the primary purpose of a Request for Proposal (RFP) in the procurement process?
- To announce a contract award
- To solicit detailed proposals from vendors including pricing and methodology (Correct answer)
- To request a simple price quote for standard goods
- To notify contractors of a project cancellation
Correct answer: To solicit detailed proposals from vendors including pricing and methodology
An RFP solicits detailed proposals from potential vendors, covering technical approach, qualifications, and pricing for complex procurements.
Question 3: In construction cost management, what does the term 'bid bond' refer to?
- A bond guaranteeing project completion
- A surety bond ensuring the bidder will honor the bid and sign the contract if awarded (Correct answer)
- A bond covering material defects
- A bond protecting subcontractors against non-payment
Correct answer: A surety bond ensuring the bidder will honor the bid and sign the contract if awarded
A bid bond is a surety instrument guaranteeing that a bidder will enter into the contract at the bid price if selected.
Question 4: Which procurement method is most appropriate when price is the sole selection criterion and requirements are clearly defined?
- Qualifications-Based Selection
- Invitation for Bid (IFB) (Correct answer)
- Negotiated procurement
- Best Value Selection
Correct answer: Invitation for Bid (IFB)
An Invitation for Bid (IFB) is used when specifications are clear and the award goes to the lowest responsive, responsible bidder.
Question 5: What is 'contract claims management' primarily concerned with?
- Drafting the original contract language
- Processing requests for additional compensation or time beyond the original contract terms (Correct answer)
- Selecting qualified subcontractors
- Tracking material deliveries
Correct answer: Processing requests for additional compensation or time beyond the original contract terms
Contract claims management involves evaluating and resolving contractor requests for additional money or schedule time due to changed conditions or disputes.
Question 6: A cost technician reviewing a subcontract notices the scope of work is ambiguous. What is the most appropriate action?
- Award the contract and resolve scope issues later
- Request a contract modification to clarify scope before execution (Correct answer)
- Select a different subcontractor
- Proceed with a verbal understanding of the scope
Correct answer: Request a contract modification to clarify scope before execution
Ambiguous scope in a contract should be clarified through a formal modification before execution to prevent future disputes and cost overruns.
CCT CCT Procurement & Contract Management 1
Which contract type transfers the most financial risk to the contractor?