DBIA DBIA - Design-Build Institute of America Cost Management and Value Engineering Questions and Answers 2 — Questions and Answers
Question 1: What is a design-build contingency fund primarily used for?
- Covering unforeseen scope changes and unknown site conditions (Correct answer)
- Paying design team overtime wages
- Funding marketing and proposal preparation costs
- Compensating subcontractors for delays caused by the owner
Correct answer: Covering unforeseen scope changes and unknown site conditions
A contingency fund is reserved to address unforeseen conditions, scope gaps, or unexpected cost increases without breaching the contract price.
Question 2: How does an 'allowance' differ from a 'contingency' in a design-build contract?
- An allowance is for a known but undefined scope item; a contingency covers unknown risks (Correct answer)
- An allowance covers schedule delays; a contingency covers cost overruns
- An allowance is owner-controlled; a contingency is subcontractor-controlled
- An allowance is a profit reserve; a contingency is a fee adjustment
Correct answer: An allowance is for a known but undefined scope item; a contingency covers unknown risks
Allowances are budgeted amounts for known scope items (e.g., landscaping) whose details are yet to be decided, while contingencies address unforeseen risks.
Question 3: In a design-build GMP contract, cost savings below the GMP are typically handled by:
- Shared savings between the owner and design-builder per a negotiated formula (Correct answer)
- Returned entirely to the owner as a credit
- Retained entirely by the design-builder as additional profit
- Applied automatically to fund future change orders
Correct answer: Shared savings between the owner and design-builder per a negotiated formula
GMP contracts commonly include a shared savings clause that incentivizes the design-builder to control costs by splitting underruns with the owner.
Question 4: What is 'life-cycle cost analysis' (LCCA) and why is it important in design-build?
- Evaluating total ownership costs over the facility's useful life to optimize design decisions (Correct answer)
- Calculating the cost of the design-build team's salaries over the project
- Estimating construction costs using historical life-span data
- Reviewing equipment rental costs for the duration of construction
Correct answer: Evaluating total ownership costs over the facility's useful life to optimize design decisions
LCCA considers first costs, operating, maintenance, and end-of-life costs, enabling the design-build team to recommend materials and systems that optimize long-term value.
Question 5: Which party typically prepares and maintains the cost model in an integrated design-build project?
- The design-builder's estimating team in collaboration with the designer (Correct answer)
- The owner's independent cost estimator exclusively
- The lead subcontractor based on unit prices
- The construction manager retained separately by the owner
Correct answer: The design-builder's estimating team in collaboration with the designer
In integrated design-build, the design-builder's estimating team works alongside the design team to continuously update the cost model as design decisions evolve.
Question 6: What is the purpose of a 'basis of design' document in managing design-build costs?
- To document the design assumptions and criteria that underpin the project budget (Correct answer)
- To list all subcontractor bids received during procurement
- To record change orders after construction begins
- To certify that the design meets all local building codes
Correct answer: To document the design assumptions and criteria that underpin the project budget
The basis of design captures the assumptions, standards, and performance goals that justify the project budget and serve as a baseline for evaluating scope changes.
DBIA DBIA - Design-Build Institute of America Cost Management and Value Engineering Questions and Answers 2
What is a design-build contingency fund primarily used for?