CCA Construction Contract Types and Risk Management 1

Question 1

Which contract type places the most financial risk on the contractor?

Accepted Answer

Fixed-price contract

Answer

Cost-plus contract

Answer

Time and materials contract

Answer

Guaranteed maximum price (GMP) contract

Question 2

What is a key feature of a cost-plus contract?

Accepted Answer

Owner pays actual costs plus a fee

Answer

Total cost is predetermined

Answer

Used only in government projects

Answer

Risk is borne entirely by the owner

Question 3

Which document typically outlines risk allocation in construction contracts?

Accepted Answer

Contract agreement

Answer

Invoice schedule

Answer

Construction drawings

Answer

Purchase order

Question 4

What is the primary risk in a time and materials contract?

Accepted Answer

Uncontrolled costs

Answer

Project cancellation

Answer

Undefined scope

Answer

Permit delays

Question 5

What does a Guaranteed Maximum Price (GMP) contract include?

Accepted Answer

Cost plus with a price cap

Answer

Unlimited change orders

Answer

Fixed price with bonus clauses

Answer

Time-based billing only

Question 6

Which clause in a contract helps manage risk by addressing unexpected delays?

Accepted Answer

Force majeure clause

Answer

Warranty clause

Answer

Termination clause

Answer

Payment terms clause