Contracts

Question 1

A document used to rush in new subcontractors or establish penalties, but it does not hold the same legal weight as a full contract.

Answer 1

What is a “Letter of Intent” in contracting?

Question 2

What is the most common contract type in construction?

Answer 2

Lump sum contract, which provides a fixed total for a specific job and covers the complete scope of work.

Question 3

It requires a list of total quantities from the owner/architect and sets the price per unit, with costs unknown until completion.

Answer 3

What does a “Unit Price Contract” require?

Question 4

What contract type includes labor, materials, and a contractor fee, with the owner directly paying invoices. GC bids subs aggressively.

Answer 4

What is the main feature of a “Cost Plus Fee Contract”?

Question 5

What contract is used for when the scope of work is poorly defined, often for emergency repairs or renovations.

Answer 5

When is a “Cost Plus Percentage of Cost Contract” typically used? AKA Time and materials contract.

Question 6

What should be verified about the “Owner” in contract writing?

Answer 6

Legal ownership should be confirmed, often through the assessing office.

Question 7

What is a “Retainage” in a construction contract?

Answer 7

It is a portion of the payment withheld until final project completion.

Question 8

What is the purpose of a “Final Punch List”?

Answer 8

It includes a final walkthrough to address any remaining tasks, often focusing on interior paint issues.

Question 9

What are “Liquidated Damages”?

Answer 9

Penalties for project delays, such as a $300/day fee for not finishing on time.

Question 10

What are examples of real damages in a contract

Answer 10

owners not being able to move into house on time causing moving renting etc like costs

Question 11

These confirm that construction aligns with structural and utility plans (ex cabinets/behind wall utilities, landscaping irrigation)

Answer 11

What should “Shop Drawings” confirm?

Question 12

What is important about “Weather Conditions” in contracts?

Answer 12

They should account for potential hot or cold weather impacts, like concrete curing.

Question 13

Manuals, warranties, and training for equipment usage, ensuring the owner is informed post-project are examples of what sub category in a contract?

Answer 13

What do “Close-Out Documents” include?

Question 14

What is recommended for “Sanitation” on construction sites?

Answer 14

A portable restroom should be on-site, with permission from relevant authorities.

Question 15

What is the purpose of “Photo Records” during a project?

Answer 15

To document progress, including before, during, and after shots.

Question 16

Why is a “Log Book” maintained in new construction?

Answer 16

To record daily activities, conditions, and inspections, keeping track of project progress.

Question 17

Why is it necessary for a “Temporary Power” contractual line item?

Answer 17

to ensure arrangement by the homeowner, with details outlined in the contract.

Question 18

Who administrates testing for the Michigan Builders License?

Answer 18

PSI administrates the testing.

Question 19

Which organization regulates licenses for builders in Michigan?

Answer 19

LARA (Department of Licensing and Regulatory Affairs).

Question 20

It is contract language that resolves contractor-client issues through alternative dispute resolution methods outside of court.

Answer 20

What is Independent Arbitration in the context of construction contracts?

Question 21

A change in the contract or set of plans.

Answer 21

What is an Addendum Change

Question 22

They facilitate different or new work, with payment typically due at the time of signing.

Answer 22

What are Change Orders used for?

Question 23

How are Progress Payments structured in large jobs?

Answer 23

They are paid throughout the project, often as the contractor reaches certain milestones.

Question 24

What key details should a contract agreement include?
Back:

Answer 24

Date of agreement
Contact info (cell phones)
Name/location of project
Architect’s details
Drawings/specifications (project number, revisions)
Contract lump sum and allowances

Question 25

Who owns the project drawings?

Answer 25

Architect or licensed homeowner.
Non-licensed plans can’t be reused for future builds.

Question 26

What are the contractor’s key responsibilities?

Answer 26

Review documents and conditions
Prepare schedules
Supervise sites and subcontractors
Provide labor/materials and warranties
Handle permits, inspections, clean-up, and occupancy certificates

Question 27

What are the architect’s responsibilities?

Answer 27

Represent owner’s interests
Approve/reject work and payments
Issue timely addendums and submittals
Visit sites for monitoring

Question 28

What are the three methods of Alternative Dispute Resolution (ADR)?
Back:

Answer 28

Mediation (non-binding, voluntary)
Arbitration (binding, no appeal)
Facilitation (non-binding, separate party interviews)

Question 29

Who cannot be covered under a workers’ compensation policy?

Answer 29

A sole proprietor that operates as an independent contractor.
A sole proprietor with no employees.

Question 30

What should you be sure a subcontractor has before hiring them?

Answer 30

a workers’ compensation exclusion form
or
a workers’ compensation policy

Question 31

Before hiring a subcontractor with a workers’ compensation exclusion form, what additional form should you have them fill out to reduce your liability?

Answer 31

a Subcontractor Release and Waiver of Liability Form

Question 32

Workers’ Compensation related to a death shall include _____% of the after-tax weekly wage of the employee to be paid to dependants who were wholly dependent upon the employee’s earnings. Such payment shall continue for _____ weeks from the date of death.

Answer 32

80%/500 weeks

Question 33

Which type of insurance protects the construction project and materials from external forces and has endorsements that can include protection against fire, wind, storms, vandalism and “acts of God”.

Answer 33

all risk builders insurance