CWD Business Operations & Contract Management Flashcards

A change order in a well drilling contract is used to:

Answer: Modify the original scope, schedule, or price due to unforeseen conditions or client requests

A change order formally documents and authorizes modifications to the original contract scope, timeline, or cost when unforeseen site conditions or client-requested changes arise during the project.

Workers' compensation insurance is required in most US states for well drilling companies because:

Answer: It covers employee medical costs and lost wages for job-related injuries without requiring fault

Workers' compensation provides mandatory no-fault coverage for employees injured on the job, paying medical expenses and lost wages regardless of who caused the injury, as required by most state laws.

The primary purpose of a lien waiver signed by a well drilling subcontractor is to:

Answer: Release the property owner's land from potential mechanic's liens after payment is received

A lien waiver is a document signed by the contractor/subcontractor confirming they have received payment and waiving their right to file a mechanic's lien against the owner's property for that portion of work.

When estimating a drilling project, what does 'contingency' typically refer to?

Answer: A percentage added to cover unforeseen costs or risks

Contingency is a percentage (typically 5-15%) added to a project estimate to cover unforeseen conditions, cost overruns, or risks that cannot be precisely predicted before drilling begins.

A well driller operating without a required state license may face which of the following consequences?

Answer: Civil fines, stop-work orders, contract voiding, and criminal charges in some states

Unlicensed well drilling can result in significant civil penalties, stop-work orders, voiding of contracts (making payment collection impossible), and even criminal misdemeanor charges in many states.

Which type of bond protects a project owner if a licensed well driller fails to complete the contracted work?

Answer: Surety performance bond

A surety performance bond guarantees that if the contractor defaults or fails to complete the project, the surety company will either complete the work or compensate the owner for losses up to the bond amount.