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Construction contracts > lecture 19 > Flashcards

lecture 19 Flashcards

1
Q

means quantifying the amount of work eligible for payment.

A

Measurement

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2
Q

is the disbursement of money proportionate to that

quantity of work.

A

Payment

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3
Q

Under some contracts, ________ may involve only identifying the attainment of specified milestones for which predetermined amounts of payment are to be paid.

A

measurement

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4
Q

Under other contracts, particularly ________,

measurement means verifying the quantities of work submitted for payment based on unit prices.

A

unit price contracts

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5
Q

Most projects involve ______ and ___________.

A

significant costs

extended construction periods

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6
Q

The contractor depends on cash flowing through the contractor’s operation to minimize the need to _________.

A

borrow funds

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7
Q

Progress payments are standard, and the _____ promise to make payment is a primary obligation under the construction contract.

A

owner’s

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8
Q

Estimates of progress and the amounts paid are valuable indicators other people can use to determine whether their _______ in the project are being met.

A

interests

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9
Q

The _________ was the solution for the owner in order not to pay more than once for the
same work and protect himself/herself from Mechanic’s lien.

A

payment bond

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10
Q

States that the subcontractor will receive payment when the contractor receives payment from the owner.

A

“pay when paid”

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11
Q

Most contracts require that a schedule of values be submitted to the ________ for approval prior to the first application for payment.

A

architect/engineer (A/E)

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12
Q

It is not uncommon
for the contractor to be required to submit an _________________________________ as
a prerequisite for payment.

A

updated construction progress schedule, test reports, material certifications, and other accompanying information

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13
Q

On more complex projects, schedules may be both ________, which would allow its use with the application for payment.

A

manpower and cost loaded

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14
Q

The contractor may also be required to submit a list of __________________ for review by the owner’s lender.

A

proposed or pending change orders and change order requests

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15
Q

_____ and other standard contract documents refer to progress payments.

A

AIA

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16
Q

The period between progress payments is usually stated in the _________.

A

general conditions

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17
Q

__________ is the most common payment interval.

A

The calendar month

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18
Q

are appropriate for most projects, including those of long duration and high cost, where the rate of progress will vary from month to month.

A

Monthly progress payments

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19
Q

may be appropriate for small projects performed by small contractors or large fast-track projects where large amounts of money are expended over brief periods on a regular basis.
.

A

Twice-monthly or even weekly progress payments

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20
Q

are predetermined partial
amounts of the total contract sum tied to the attainment of identifiable
milestones.

A

Provisional payments

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21
Q

may be percentages of the total quantities in the project, or they may be certain portions of the entire project that have been assigned a predetermined value.

A

Milestones

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22
Q

are a form of progress payment, but are distinguished from periodic progress payments by being independent of a time interval.

A

Provisional payments

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23
Q

are often used for design-build projects.

A

Provisional payments

24
Q

When projects are of a size that enables the work to be completed in a short period, the contract sum is small, or the vast majority of the contract sum is earned in the latter stages of the project, a ________ of the entire contract amount may be appropriate.

A

single payment

25
Q

For projects with critical deadlines, the _________ provision provides a strong incentive for timely completion.

A

“single payment on completion”

26
Q

This is more commonly used in subsontracts and purchase orders.

A

Single purchase

27
Q

For __________________ (except for design-build), the A/E makes a determination of substantial completion of the entire work or specified portions of the work.

A

single-payment and provisional-payment contracts

28
Q

Under __________, the A/E often is required to determine the quantities or percentage completed of partially completed work that the A/E believes will conform in general to the requirements of the contract documents when the project is finally completed.

A

periodic progress payment contracts

29
Q

There are three methods of measuring or

quantifying the amount of work eligible for payment:

A
  1. Stipulated-Sum Contracts
  2. Unit Price Contracts or Items
  3. Cost-Plus Contracts
30
Q
  1. The contract requires that values of the various portions of the work be established before the first application for payment.
  2. This is accomplished by the contractor
    preparing and submitting a schedule of values breaking down the contract amount into definable line items with corresponding dollar amounts assigned.
  3. The quantities or percentages of completed or partially completed portions of work
    are estimated by the contractor at each payment interval, and payments are requested on a proportionate basis.
A

Stipulated Sum Contracts

31
Q

________________, progress payments are related to a schedule of values. The schedule of values serves as a basis for estimating percentage payments for partially completed work.

A

For stipulated-sum or lump-sum contracts

32
Q
  1. The actual quantity of work is measured and
    verified as it is completed and payments are made at the agreed-upon unit price rates.
  2. Often used for linear work such as gas, water, sewer, and electrical utility line work and for roadway paving, where the estimated quantities and the final constructed quantities are not expected to vary significantly, but simple measurement and progress payment on the basis of unit pricing are desired.
  3. Contracts generally consist of
    items that are measurable in units suited to progress payments, such as lineal feet of storm sewer pipe or cubic yards of topsoil.
  4. Items may also be used in other
    types of contracts.
  5. At the contractually stipulated interval, the actual in-place units are measured or counted.
A

Unit Price Contracts

33
Q

Utilized where both the quantity and the cost per unit of work are uncertain or when the contract sum is a cost of the work plus fee not to exceed a guaranteed maximum price contract.

A

Cost Plus contracts

34
Q

Cost-plus fee payment, also referred to as the _______ basis of compensation, may also be applied to work required by change when the
parties to the contract cannot agree on a price before
performing the work.

A

time and material

35
Q

As the term cost-plus implies, the _______ is reimbursed the contractor’s actual cost of labor, equipment, and material, plus a predetermined fixed fee, or percentage of costs, for overhead and profit.

A

contractor

36
Q

does not involve the measurement

of quantities.

A

Cost-plus fee payment

37
Q

are administered on the basis of

receipts for materials and equipment and on payroll records to establish values for progress payments.

A

Cost-plus contracts

38
Q
  1. The _________ is prepared by the contractor according to the contract
    documents.
  2. It is an itemization of the costs of various portions of the work, which together comprise the total contract sum.
  3. Depending on the complexity of the project,
    the schedule of values could be divided into line items using either UniFormat™ or MasterFormat® classification system.
  4. Each line has a value that is a proportionate fraction
    of the total value of the whole project.
  5. Taking those line items and then dividing the
    costs between material and labor provides further clarity.
  6. Having the ability to compare invoice data to quantities of stored material, for example, makes processing of the application for payment more timely and accurate.
A

The schedule of Values

39
Q

The schedule of values complements the _________ and shows that the contractor understands the contract requirements.

A

construction progress schedule

40
Q

identifies how all the costs in the project are apportioned and can lead to revision or
refinement of the construction progress schedule to account for activities previously overlooked.

A

The schedule of values

41
Q

Developing a proportionate ________ can result in the contractor giving more attention to the allocation of resources and the early planning of the
later activities of the project, such as commissioning and demonstration and training.
A properly proportioned _________ eases the payment process and allows time for the contractor and the A/E to focus on construction activities.

A

schedule of values

42
Q
  1. Progress payments are usually subject to the _____ of a prescribed percentage of the amount
    due for payment.
  2. This ____ is not to force the contractor to perform.
  3. It protects the owner against errors in estimating the value of work completed or defective work and is used to settle other participant (third-party) claims against the contractor before the release of final payment.
    4.If portions of the work paid for have latent defects,
    or if simple errors in estimating quantities have been made, the _____ is available to the owner to correct the situation.
  4. _______ reduction may be specified to occur at the attainment of some milestone such as 50 percent completion or substantial completion of the project.
A

Retainage

43
Q
  1. The theory behind the ______ is that since the unpaid contractor or supplier provided work, labor, or materials, which increased the value of the property, they may be entitled to an interest in the property to the extent of the increase in value that they provided.
A

mechanic’s lien

44
Q
  1. In some jurisdictions, it is necessary to provide the owner with an ___________________, and the absence of such advance notice will preclude a mechanic’s lien later.
A

advance notice prior to performing

any work

45
Q

3.Most jurisdictions also provide time limits for filing liens, often _____ from the time when the last work was performed.

A

90 days

46
Q
  1. Other states provide that before a mechanic’s lien can be asserted against the property, a court hearing must take place to _________ the validity of the lien.
A

preliminarily assess

47
Q
  1. __________ generally do not apply to public projects, as contractors and suppliers are not allowed to lien public property. As a result, most public projects
    require payment and performance bonds to provide unpaid parties with a remedy to replace the mechanic’s lien right that does not exist on public projects.
A

Mechanic’s liens

48
Q
  1. In many cases, the right to a mechanic’s lien can be waived in the contract as a matter of negotiation between the __________.
A

owner and the contractor

49
Q

Stop notices are the usual remedies available to subcontractors, laborers, and suppliers for_______________.

A

breach of contract against the contractor

50
Q

Some jurisdictions have statutes that allow contractors,

subcontractors, sub-subcontractors, and suppliers to assert claims on construction funds. These are called ____.

A

Stop notices

51
Q

A stop notice may be considered a lien on _______ rather than on real property.

A

construction funds

52
Q

Final acceptance of the work is indicated by ___________.

A

issuance of final payment

53
Q

Final payment is recommended by the _____ only after all project closeout procedures have been completed.

A

A/E

54
Q

Upon acceptance of final payment, the ________ waives all claims except those previously made in writing and according to the contract conditions against either the owner or the A/E.

A

contractor

55
Q

The _____, in making final payment, also waives all

claims except claims arising from unsettled liens and defective work appearing after final inspection.

A

Owner

Construction contracts (22 decks)

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