CSLB Estimating, Bidding, and Cost Control 3 — Questions and Answers
Question 1: Which project delivery method involves the owner contracting with a single entity responsible for both design and construction?
- Design-bid-build
- Construction management at-risk
- Design-build (Correct answer)
- Integrated project delivery
Correct answer: Design-build
In design-build, the owner contracts with one entity (the design-builder) who is responsible for both the design and construction of the project, streamlining responsibility.
Question 2: Earned Value Management (EVM) measures project cost performance by comparing:
- Budgeted cost of work scheduled vs. actual cost of work performed
- Budgeted cost of work performed vs. actual cost of work performed (Correct answer)
- Planned finish date vs. actual finish date
- Original contract value vs. current contract value
Correct answer: Budgeted cost of work performed vs. actual cost of work performed
The Cost Performance Index (CPI) in EVM compares the budgeted cost of work actually performed (earned value) to the actual cost incurred, measuring how efficiently money is being spent.
Question 3: A 'cost-plus' contract provides payment to the contractor for:
- A fixed fee regardless of project costs
- All allowable direct costs plus a fee for overhead and profit (Correct answer)
- Labor only, with materials paid directly by the owner
- Only costs that exceed the original budget
Correct answer: All allowable direct costs plus a fee for overhead and profit
A cost-plus contract reimburses the contractor for all allowable project costs and adds a fee (fixed, percentage, or incentive-based) to cover overhead and profit.
Question 4: In California, a contractor who submits a false claim for payment on a public works project may be liable under:
- California Business and Professions Code §7110 only
- California False Claims Act (Government Code §12650 et seq.) (Correct answer)
- California Penal Code for fraud only
- Only federal False Claims Act
Correct answer: California False Claims Act (Government Code §12650 et seq.)
The California False Claims Act imposes treble damages and civil penalties on contractors who knowingly submit false payment claims to California government entities.
Question 5: What is 'front-loading' a schedule of values, and why is it a concern?
- Scheduling difficult work first to reduce risk
- Assigning inflated values to early work items to receive more payment upfront than work earned (Correct answer)
- Prioritizing materials procurement over labor costs
- Starting multiple phases simultaneously
Correct answer: Assigning inflated values to early work items to receive more payment upfront than work earned
Front-loading means inflating the value of early completion items in the schedule of values so the contractor receives more payment than the work is actually worth, creating cash flow leverage at the owner's expense.
Question 6: A 'Guaranteed Maximum Price' (GMP) contract benefits the owner by:
- Eliminating all design risk from the contractor
- Capping the owner's exposure to cost overruns at the GMP amount (Correct answer)
- Requiring the contractor to absorb all cost savings
- Allowing the owner to change the scope without cost adjustment
Correct answer: Capping the owner's exposure to cost overruns at the GMP amount
A GMP contract sets a maximum price the owner will pay — cost overruns above the GMP are borne by the contractor, while cost savings may be shared per the contract terms.
CSLB Estimating, Bidding, and Cost Control 3
Which project delivery method involves the owner contracting with a single entity responsible for both design and construction?