NASCLA Contracts and Project Documentation 2

Question 1

What is the purpose of a 'retainage' provision in a construction contract?

Accepted Answer

To withhold a percentage of payment as security until project completion

Answer

To retain the contractor's license during the project

Answer

To set aside funds for future change orders

Answer

To reserve the right to hire additional contractors

Question 2

Which document formally establishes the scope of work, materials, and construction methods for a project?

Accepted Answer

The project specifications

Answer

The notice to proceed

Answer

The certificate of occupancy

Answer

The performance bond

Question 3

If a contractor discovers unexpected subsurface conditions (like rock instead of soil), they should:

Accepted Answer

Issue a change order request to address the differing site conditions

Answer

Continue work and absorb the extra cost

Answer

Stop work permanently and abandon the project

Answer

Hire a new subcontractor at their own expense

Question 4

What does 'substantial completion' mean in a construction contract?

Accepted Answer

When the project is sufficiently complete for the owner to use it for its intended purpose

Answer

When 50% of the work is finished

Answer

When the final inspection is passed

Answer

When all punch list items are resolved

Question 5

A contractor's 'warranty' on construction work typically covers:

Accepted Answer

Defects in materials or workmanship for a specified period after completion

Answer

The contractor's business license renewal

Answer

Protection against natural disasters

Answer

Future price increases in materials

Question 6

Which of the following is an example of a contractor's breach of contract?

Accepted Answer

Failing to complete the project by the specified date without cause

Answer

Requesting a change order for additional work

Answer

Hiring licensed subcontractors

Answer

Submitting progress billing invoices