CPCM Certified Professional Contract Manager: Negotiation and Conflict Resolution in Contracts 3 — Questions and Answers
Question 1: What is the primary purpose of a Dispute Review Board (DRB) in large construction contracts?
- To provide real-time, non-binding recommendations before disputes escalate to arbitration (Correct answer)
- To replace arbitration as a binding adjudication method
- To audit contractor invoices for compliance
- To oversee change order approvals
Correct answer: To provide real-time, non-binding recommendations before disputes escalate to arbitration
DRBs visit project sites periodically and issue recommendations that help parties resolve disagreements without litigation.
Question 2: Which of the following BEST defines 'reservation price' in contract negotiation?
- The least favorable point at which a party will still accept a deal (Correct answer)
- The opening bid presented in the first negotiation session
- The price listed in the contract's base year
- The maximum overhead rate allowed under cost-reimbursement contracts
Correct answer: The least favorable point at which a party will still accept a deal
The reservation price is the walk-away point; any deal worse than this is rejected.
Question 3: A contractor submits a Request for Equitable Adjustment (REA) claiming differing site conditions. Which of the following is NOT a required element to prove a Type I differing site condition?
- The contractor's negligence in not discovering the condition during site inspection (Correct answer)
- Actual subsurface conditions differing materially from contract indications
- The contractor reasonably relied on the contract's site data
- A causal link between the condition and the increased cost
Correct answer: The contractor's negligence in not discovering the condition during site inspection
Type I claims require reliance on contract-indicated conditions, not proof of contractor negligence.
Question 4: In mediation, the mediator's primary role is to:
- Facilitate communication and help parties reach a voluntary settlement (Correct answer)
- Render a binding decision based on the merits
- Represent the interests of the weaker party
- Enforce the contract terms as written
Correct answer: Facilitate communication and help parties reach a voluntary settlement
Mediators are neutral facilitators; they have no authority to impose a decision on the parties.
Question 5: Under the Contract Disputes Act (CDA), a contractor must submit a certified claim when the amount claimed exceeds:
- $100,000 (Correct answer)
- $50,000
- $250,000
- $500,000
Correct answer: $100,000
The CDA requires certification for claims exceeding $100,000 to deter fraudulent or inflated claims against the government.
Question 6: Which negotiation concept describes a package of trades where each party gives up something of lower value to receive something of higher value?
- Logrolling (Correct answer)
- Bracketing
- Escalation
- Framing
Correct answer: Logrolling
Logrolling creates joint value by trading issues based on differing priorities between the parties.
Question 7: A 'step negotiation' clause in a contract requires parties to:
- Escalate disputes through successive management levels before seeking external resolution (Correct answer)
- Renegotiate price at predetermined intervals
- Obtain board approval before each negotiation session
- Submit offers in increasing increments
Correct answer: Escalate disputes through successive management levels before seeking external resolution
Step negotiation clauses mandate internal escalation to increasingly senior officials, exhausting internal options first.
CPCM Certified Professional Contract Manager: Negotiation and Conflict Resolution in Contracts 3
What is the primary purpose of a Dispute Review Board (DRB) in large construction contracts?