Contracts and Claims Management

Question 1

Key stages in contract life cycle

Answer 1

Discovery
Pre-award
Proposal process
Contract execution and management
Contract closeout

Question 2

Discovery phase

Answer 2

Assess project feasibility
Benchmarking - assess cost and schedule
Business development - meetings with contractors
Review business case
Contractor walk away points
Short term contract

Question 3

Pre award phase

Answer 3

Delivery method (DB or DBB)
Contract strategy (LS or T&M)
Tendering strategy (ITT or RFP)
Risk management
Draft tender document
Evaluation criteria

Question 4

Proposal process

Answer 4

Bid solicitation
Subcontracting (contractor identifies subcontractors)
Bid submissions
Bid selection
Contract formulation

Question 5

Tendering and proposal strategies

Answer 5

Open tendering
Selective tendering
Negotiated tendering (negotiated with a single supplier)
Framework tendering (framework with one or more suppliers)
Single stage tendering - only price based on an ITT
Two stage tendering - early appointment for 1st stage and negotiate a price for 2nd stage
RFP - full technical proposal because scope is not confirmed

Question 6

Key contract clauses

Answer 6

Change clause
Dispute resolution (to avoid litigation)
Indemnity (indemnity transfers risk from one party to another)
Liquidated damages (upfront agreed amount for delays or damages)
Payment clause
Termination clause
Time-barred clause

Question 7

Project delivery methods

Answer 7

Design - bid - build
Design - build / turnkey
BOT (an entity designs, constructs, operates and finances the project and transfers to owner like toll roads)
PPP or P3
Direct labor (owners hires craft and labor and designs and constructs themselves)

Construction management at risk CMAR
Professional construction management PCM (same as CMAR but without risk)
Construction management multi-prime (same as DBB for experienced clients for emergency or fast track projects)

Job order contracting (IDIQ framework and call off using CTC or construction task catalog with preset prices)
Multiple award task order contract MATOC (same as JOC)

Integrated project delivery or IPD (single contract for design and construction with shared risks/rewards, guaranteed costs, waivers of liability between members and lean principles)

Question 8

PDCS tool

Answer 8

CII project delivery and contract strategy tool
Helps owners select the most appropriate project delivery method

Question 9

Contract types

Answer 9

Lump sum
Unit price
Guaranteed maximum price GMP (cost plus fee but cost is capped)
Cost plus
Time & Material (day rate for labor plus material at cost, used when scope is not well defined)

Question 10

Standard forms of contract

Answer 10

JCT
NEC
FIDIC

Question 11

CII Integrated Project Risk Assessment Tool / IPRA

Answer 11

A tool developed by CII as a standardized approach for risk assessment

Question 12

Risk classification categories

Answer 12

Technical and construction
Commercial (competitiveness, contractual, economic, financial and stakeholder risks)
Environmental and social (occupational risks and environmental / natural disasters)

Question 13

Risk management terminology

Answer 13

Assessment - likelihood and impact
Analysis - done after assessment such as probabilistic analysis
Deterministic risk analysis - single point estimates of impact
Probability - different from likelihood
Monte carlo simulation - probabilistic model for risk analysis

Question 14

10 best practices in contract management

Answer 14

Integrated teams
Set contract KPIs
Risk management
Change management
Resolve disputes efficiently
Tailor project delivery methods
Unambiguous contract languages
Well defined scope of work
Insurance coverage
Contract is understood and followed

Question 15

Contract award method

Answer 15

Competitive bid
Prequalified competitive bid
Best value
Negotiated

Question 16

Common disclaimer clauses

Answer 16

Owner shifts the risk by disclaimer clauses

Uncertainty of work conditions
Delaying events
Indemnification
Liquidated damages
Sufficiency of contract documents

Question 17

06 common types of risks in contracts

Answer 17

Incorrect contract type and misaligned incentives between parties
Inappropriate risk allocation
Increased complexity of contracts
Inadequate insurance
Risks in general conditions of contract
Pricing risks

Question 18

Risk management hierarchy

Answer 18

Strategic risks - externally driven like funding
Program risks
Project risks
Contractor risks

Question 19

Risk mitigation strategies

Answer 19

Risk avoidance
Risk acceptance
Risk reduction
Risk transfer
Contingency

Question 20

What is a claim

Answer 20

A request by a contract party for compensation of damages caused by failure of other party to fulfil contract obligations

Question 21

Types of claims

Answer 21

Contractual
Extra-contractual (events not captured in the contract)
Ex-gratia (no contractual or legal entitlement but based on moral grounds)
Extension of time
Breach of time frame

Question 22

Claim prevention and mitigation

Answer 22

Claim prevention typically happens in the Discovery and Pre-award phase e.g. PMIS
Claim mitigation typically happens between the pre-award and contract execution phases (dispute resolution boards)

Question 23

Components of a claim

Answer 23

Statement of claim
Other activities affected by the claim
Schedule analysis
Opportunity lost
Loss of profit

Question 24

Common methods of dispute resolution

Answer 24

Negotiation
Mediation (3rd party non-binding)
Adjudication (less formal than arbitration, non binding and interim decision only)
Arbitration (3rd party binding)
Expert determination (claims of special/technical nature and binding by contract)
Litigation