Hinze Chapter 11-14

Question 1

Balanced bid

Answer 1

a bid which the anticipated costs for the various items are accurately reflected in the unit prices that are submitted

Question 2

Unbalancing a bid

Answer 2

is a method used by some contractors in which the unit prices of the various bid items are altered so they do not reflect the true cost of the item

Question 3

Can an owner reject an unbalanced bid?

Answer 3

Can be rejected as being irregular

Question 4

What are the disadvantages of a unit price contract?

Answer 4

Owner won’t be certain of actual cost until the project is complete. The extent of this shortcoming is directly related to the accuracy of the estimate

Question 5

When is an unit price contract appropriate?

Answer 5

Unit price contracts are appropriate for when the project is well defined but the actual quantities are impossible to estimate with accuracy until after construction has started

Question 6

Cost-Plus Contract

Answer 6

A contractor is reimbursed for most of the direct expenditures associated with a particular project plus an allowance for overhead and profit. Can be used with a guaranteed maximum. Savings in this case can be shared between the owner and the contractor

Question 7

When is a cost-plus contract appropriate?

Answer 7

This contract is appropriate when the actual costs of the project are difficult to measure with accuracy. This could be due to incomplete plans, the project cannot be accurately portrayed or if a short time period. Can be useful if a lot of changes are anticipated throughout the project.

Question 8

What categories of reimbursements are there in a cost-plus contractor

Answer 8

Contractor’s reimbursement will fall into the categories of Labour, Materials and Equipment, and subcontractor costs

Question 9

Lump Sum Contract

Answer 9

• Most common type of contract used in the construction industry
• On most of these contracts the contractor will be made out monthly
• Value of ind. Items is ideally set out before the start of construction

Question 10

Job Order Contracting (JOC)

Answer 10

• An ‘on call’ contractor for work relating to renovation, repair and construction projects
• Ensures quick contractor response for work that arises without notice

Question 11

Cardinal Changes

Answer 11

Changes not within the general scope

Question 12

What are the risks to a contractor who performs work required by a cardinal change

Answer 12

May not be able to force payment

Question 13

What are the risks to the owner’s rep in authorizing a cardinal change?

Answer 13

Forcing the contractor to do this change would be a breach of contract

Question 14

It is common for contracts to stipulate that changes in the work be authorized in writing by someone in authority. Under what conditions might a verbal change be considered valid?

Answer 14

If the new work initiated a new contract or in the case of emergency situations

Question 15

When does the owner has an inherent or implied right to make reasonable changes to the project

Answer 15

Changes within the general scope of the project

Question 16

How does a field change differ from a change order?

Answer 16

If the change has no impact on the contract’s duration or amount, it is a field change

Question 17

What is the difference between additional work and extra work?

Answer 17

Extra work consists of work outside of the contract

Additional work consists of work that must be undertaken to meet the contract requirements, w/o this work, the work requested in the original contract will not be able to be completed

Question 18

What must the change satisfy in order to be considered additional

Answer 18

• Should not have been anticipated
• Was not open to observation, and
• Could not be readily discovered until work under the contract was undertaken

Question 19

One of two possible situations must generally exist for a differing site condition or changed contention to be valid. What are they?

Answer 19

1) The actual conditions differ materially or are at variance with the conditions indicated in the contract documents
2) The actual conditions are of unusual nature and differ materially or are at variance with that the contract should not have reasonably anticipated.

Question 20

Constructive acceleration

Answer 20

not a direct order, is construed as acceleration b/c of the owner’s refusal to permit or grant time extensions for an excusable delay

Question 21

Describe the implications of compensation (in terms of time extensions and money) for delays caused by the owner/owner’s agents.

Answer 21

When a contractor anticipates added compensation for owner-caused delays they should:

• Ensure an up-to-date progress report approved by owner
• Maintain an accurate job diary outlining the relevant facts about the delay
• Give written notice to the owner indicating that a delay has been incurred
• Request a written notification from the owner that a time extension has been granted

Question 22

Describe the implications of compensation (in terms of time extensions and money) for delays caused by the contractor/contract’s agents

Answer 22

Delays by contractor may give the owner just cause to terminate the contract

Question 23

Describe the implications of compensation (in terms of time extensions and money) for delays caused by acts of god

Answer 23

As a general rule, neither party can seek damages incurred

Question 24

What basic exceptions in no damage for delay clauses permit the contractor to be awarded damages?

Answer 24

• If a delay were not contemplated at the time of contract negotiation, commonly denial of access to site
• Acts of interference, acts or omissions by the owner which actively interfere with work progress (ex. Delayed completed plans)
• Unreasonably long delays
• Fraud or bad faith

Question 25

What are the implications of not having a liquidated damages provision in a contract and the contractor does not finish in the allotted time?

Answer 25

The owner is entitled to damages as the contractor breached the contract. This can lead to long and expensive court battles

Question 26

What is the significance of substantial completion?

Answer 26

Substantial completion is triggered by owner occupancy. After substantial completion, the only funds left would be the ones withheld from contractor payments.

Question 27

What distinguishes substantial completion from final completion as far as the construction progress is concerned

Answer 27

Substantial completion will still have a punch list of items to complete prior to final completion