DBIA DBIA - Design-Build Institute of America Cost Management and Value Engineering Questions and Answers 1 — Questions and Answers
Question 1: In design-build, when is the most effective time to apply value engineering to achieve significant cost savings?
- During early schematic design (Correct answer)
- After construction documents are complete
- During the bidding phase
- After construction begins
Correct answer: During early schematic design
Value engineering applied during early schematic design offers the greatest opportunity for cost savings before design decisions become locked in.
Question 2: What is a Guaranteed Maximum Price (GMP) in the context of design-build delivery?
- A contract ceiling beyond which the owner does not pay cost overruns (Correct answer)
- The lowest possible bid a design-builder can offer
- A fixed fee paid to the designer regardless of scope
- A minimum price guarantee for subcontractors
Correct answer: A contract ceiling beyond which the owner does not pay cost overruns
A GMP establishes an upper cost limit, protecting the owner from overruns while allowing savings to be shared if the project comes in under budget.
Question 3: Which cost-estimating method is most appropriate during the conceptual phase of a design-build project?
- Parametric estimating based on cost per square foot (Correct answer)
- Quantity takeoff from completed drawings
- Subcontractor competitive bids
- Unit price schedule from historical data
Correct answer: Parametric estimating based on cost per square foot
Parametric estimating using cost-per-unit metrics is best suited when design details are not yet developed.
Question 4: In design-build contracts, what does 'open-book accounting' refer to?
- Full transparency of project costs shared with the owner (Correct answer)
- A requirement to disclose all subcontractor mark-ups publicly
- An audit of the design-builder's overhead rates
- Publishing project costs online for public review
Correct answer: Full transparency of project costs shared with the owner
Open-book accounting allows the owner to review actual costs, fostering trust and collaboration in cost-reimbursable design-build contracts.
Question 5: What is the primary goal of value engineering (VE) in a design-build project?
- Achieve required functions at the lowest overall life-cycle cost (Correct answer)
- Reduce design fees by eliminating design team members
- Accelerate the construction schedule at any cost
- Select cheaper materials regardless of long-term performance
Correct answer: Achieve required functions at the lowest overall life-cycle cost
VE systematically analyzes functions to identify alternatives that deliver the required performance at reduced total cost over the project's life cycle.
Question 6: Which contract type places the greatest cost risk on the design-builder in a design-build project?
- Lump sum fixed-price contract (Correct answer)
- Cost-plus with a percentage fee
- Cost-plus with a fixed fee
- Time-and-materials contract
Correct answer: Lump sum fixed-price contract
A lump sum fixed-price contract requires the design-builder to absorb all cost overruns, placing maximum financial risk on the design-build team.
DBIA DBIA - Design-Build Institute of America Cost Management and Value Engineering Questions and Answers 1
In design-build, when is the most effective time to apply value engineering to achieve significant cost savings?