CPE Engineering Economics & Contract Management 4

Question 1

A contractor submits a claim for 'constructive acceleration.' This means:

Accepted Answer

The owner directed faster work without a formal order

Answer

Constructive acceleration occurs when an owner implicitly demands faster progress (e.g., by denying valid time extensions) without issuing a formal written directive.

Question 2

If a project's NPV is zero, the actual return on investment equals:

Accepted Answer

The discount rate used

Answer

When NPV = 0, the project's cash flows exactly recover the investment at the applied discount rate, meaning the actual return equals that discount rate (the IRR).

Question 3

A 'no-damages-for-delay' clause in a contract:

Accepted Answer

Limits the contractor's remedy for owner-caused delays to time only

Answer

A no-damages-for-delay clause restricts the contractor's recovery for owner-caused delays to schedule extensions, barring monetary compensation.

Question 4

The economy of scale concept in engineering economics states that:

Accepted Answer

Larger facilities typically have lower unit costs than smaller ones

Answer

Economy of scale occurs because fixed costs are spread over more units and certain efficiencies emerge at larger capacities, reducing per-unit cost.

Question 5

Under a unit-price contract, the owner carries the risk of:

Accepted Answer

Quantity variations from estimated amounts

Answer

In a unit-price contract, the owner bears the quantity risk because total payment depends on actual measured quantities, which may differ from bid estimates.

(CPE) Certified Planning Engineer Practice Test

(CPE) Certified Planning Engineer Practice Test

CPE Engineering Economics & Contract Management 4