Post midterm

Question 1

Contractor pays owner’s damages

Answer 1

Inexcusable Delay

Question 2

Each party absorbs own damages

Answer 2

Excusable Delay

Question 3

Owner pays contractors damages

Answer 3

Compensatory Delay

Question 4

Owner pays for increasing work or decreasing time

Answer 4

Acceleration

Question 5

An owner may accelerate the completion date of the contract in three ways:

Answer 5

1. Decrease the amount of time
2. Changing or incresing amount of work
3. refusing to grant time extention when the contract requires it

Question 6

refers not only to conditions that were unforeseen but also to those not reasonably foreseeable

Answer 6

unforeseen conditions

Question 7

• CCDC, MMCD, Master format type of contracts

Answer 7

Units price

Question 8

A stipulated price contract

Answer 8

Lump sum or fixed price

Question 9

Why standard construction contracts?

Answer 9

1. Standardized + consistent
2. Based on years of legal experience + designed by lawyers
3. Allocating risk  between contractors + owners + consultants

Question 10

• *Advantages**
• Owner knows price in advance
• contractors entitled to keep any profits as cost savings measures
• lower admin costs for contractors

Disadvantages
-contractor is assuming more risk
( eg. Responsible for any cost over runs)
- Contractor could take more risk for delays (eg. Bad weather
- Owner’s perspective price can change
- Quality -> contractor ma not want to use cheaper materials -> to avoid that have clear specifications and a strong QC(quality control) process -> another way to avoid this is to have prequalified process

- used for projects with well-defined scope of work + price

Answer 10

Stipulated price contract (CCDC)

Question 11

Used when scope of work is well defined and quantities may not be as well defined but can be estimated.

Advantages

Disadvantages

• Less paperwork in dealing with extra work
• Less risk to contractor in regards to making profit
• If you don’t really have a good estimate at start (owner perspective) àcost overruns
• more paper work for tracking quantities

Answer 11

/Unit price

Question 12

• Is a contract in which the contractors is paid actual cost of goods + service performed plus a fee
• used when the scope of work is not well defined
  AdvantagesDisadvantages
• Lower risk for contractor (all work is paid for)
• typically, don’t have to propose a tender
• Owner can get more involved in the method and manner of contract
• Quality is likely higher
• Less paperwork with changes and extras
• Cost is likely higher than stipulated price
• Gives contractor opportunity to inflate prices
• Little incentive to complete work in a timely manner

Answer 12

Cost plus

Question 13

An event that extends the time for completion
has signficance and is substantial

Answer 13

Time is of essence

Question 14

3 things needed to prove a delay to recover damage

Answer 14

1. The delay was the fault of some other party
2. A delay had to occurred
3. The delay cost the claimant money -→ quantifiable additonal cost

Question 15

Heads of damage are the recoverable categories of damage
Example:

additional labour costs due to the lengthened time on site
increased labour and material costs because payment must be made
later than originally anticipated, and after prices have risen
costs resulting from productivity loss and loss of profit
additional site and head office overhead
costs of extending warranties and obtaining additional bonding
loss of interest on holdback

Answer 15

Heads of Damages

Question 16

is that point in the progress of a project at which
the owner can actually occupy and use a facility for its intended purpose

Answer 16

Substantial completion

Question 17

The greatest importance to the contractor of final completion is that the
release of the….

Answer 17

Holdback

Question 18

Difference between sustainable and final completetion

Answer 18

The bulk of the construction work will have been completed at the point of
substantial completion. Only minor work items and small deficiencies need to be
addressed after a project has been defined as being substantially complete.
FInal complete is where the warenty kicks in

Question 19

is a claim for payment for
work done on a construction project or
materials supplied to it.

Answer 19

Builders lien

Question 20

is required because other types of
security commonly used when goods or services are
provided on credit do not work in the construction
industry: a car can be seized, but paint or concrete
would be worthless if reclaimed

Answer 20

Lien Legislation

Question 21

the claimant must prove that
labour or materials were provided in accordance
with the contract, that payment was not made, and
that all the requirements of the lien legislation were
complied with

Answer 21

To “perfect” the lien

Question 22

How can you remove a lien

Answer 22

the owner can
provide substitute security: cash, letter of credit, lien
bond

Question 23

is a percentage of the contract value that must be
held back from progress payments – creates pool of funds

Answer 23

Holdback

Question 24

re contracts of indemnity and are governed by principles of contract
law.

Answer 24

Insurance polices

Question 25

A promise to directly compensate or reimburse another party for a loss or cost incurred.

Answer 25

Contract of indemnity

Question 26

The payment or consideration for an insurance contract is called a…. The ….. guarantees that the insurance policy will be effective for a stated period of time

Answer 26

Priemum

Question 27

the insurer is entitled to the rights of its insured as against third parties. In other words, the insurer is entitled to assume the legal position of the insured in order to recover from some other party the amount it has paid out on a claim. To the insurance company, this means that if it pays on a claim, it gains the insured’s right to sue.

Answer 27

Subrogation

Question 28

policy provides insurance coverage for a loss that "occurred" during the policy period, no matter when the claim is brought against the insured

Answer 28

Occurance based policy

Question 29

provides coverage for a claim that is brought within the policy period, no matter when the loss occurred.

Answer 29

Claims made coverage

Question 30

protects the insured party against claims made by third parties, such as a claim against a design engineer for errors and omissions.

Answer 30

Liability insurance

Question 31

protects the insured against loss or damage to property in which the insured has an interest as result of certain causes such as fire or theft.

Answer 31

Property insurance

Question 32

**“Going Bareback”**

Answer 32

**is a term used to describe a party practicing without insurance**

Question 33

policy covers claims by others for bodily injury and property damage. | (Liability insurance)

Answer 33

Comprehensive General Liability (CGL) Policy

Question 34

s the type of coverage a contractor will want to acquire to provide insurance on a project as it is being built. This will cover the structure during construction.

Answer 34

Builder’s risk insurance

Question 35

normally protects projects against losses caused by fire, lightning, vandalism and malicious mischief (e.g. theft)

Answer 35

Standard Builder’s Risk

Question 36

provides broader coverage then a standard builder’s risk policy but “all-risk” is a misnomer since the policy will still include exclusions and not cover all perils (e.g. floods and earthquakes)

Answer 36

All-Risk Builder’s Risk Insurance

Question 37

policy is a liability policy that insures all direct participants in a construction project, including the consultants, the owner and all subcontractors. It typically runs from the end of a project until a specified time afterwards, such as the end of the contractor’s warranty obligations

Answer 37

Wrap up policy

Question 38

Coverage designed to protect professionals such as engineers and engineer technologists, against liability incurred as a result of errors and omissions in performing professional services

Answer 38

Professional Liability Insurance (Errors and Omissions Insurance)

Question 39

Is like a judge, could have a construction law back ground

Answer 39

Arbitrator

Question 40

What is the difference between a General Condition and a Supplementary Condition? Also who would create a General Condition and a Supplementary Condition?

Answer 40

A general condition is a MMCD formed condition, they are the pink pages in volume 2 of the MMCD. A Supplementary condition would be a owner formed condition and there content is also owner formed.

Question 41

What are some potential problems that could arise if the contract documents are modified (List 4).

Answer 41

1. Gaps with things that were left out. 2. Varying overlaps ex. saying the same thing in two different ways 3. Order of precende problems if the changes are not made on the right document 4. Measurement and payment misalignment

Question 42

What is the underlying philosophy and benefit of the MMCD?

Answer 42

1. Be fair to all parties 2. Minimize risk taking by Contractor 3. Provide equitable dispute resolution (GC 17) 4. Provide equitable change management (GC 7, 8, 9) 5. Use plain English 6. Say it once!

Question 43

Difference between insurance and bond

Answer 43

Insurance covers specific losses, while a surety bond is for losses of any kind, for those guarantees given, for example, performance and payment.

Question 44

is a guarantee provided by a firm that states that the contractor will fulfill the terms of the contract. Form of contract known as suretyship/

Answer 44

Bond

Question 45

Three types of Bonds

Answer 45

– Bid bonds – Performance bonds – Labour and material bond (payment bonds)

Question 46

obligated to pay a specified amount of money if the principal does not perform. Guarantor on the bond

Answer 46

Surety (the bond company)

Question 47

is the party whose performance is promised or guaranteed (e.g. general contractor)

Answer 47

Principal

Question 48

assurance that a contractor will enter into a binding contract if the contract is awarded to him or her. 5 to 10 percent of the amount of bid is common failure to include a bid bond will usually result in bid being rejected.

Answer 48

Bid Bonds

Question 49

surety guarantees the obligation of the contractor to perform its contract with the owner can have any face value but 50% of the contract value is quite common (maximum level of liability of the surety) on large contracts a prime contractor often requires the major subcontractors to provide a performance bond.

Answer 49

Performance Bonds

Question 50

What can a surety do if its principal defaults

Answer 50

1. It may remedy the default, which means getting the contractor to performing its obligations or correcting the default itself. 2. It may complete the contract itself in accordance with its terms and conditions. 3. It may solicit bids for completion of the work, and pay the owner the difference between the accepted bid and the remainder owing to the principal under the original contract, up to the face value of the bond.

Question 51

guarantees that all claimants will be paid for labour and materials (e.g. subcontractors, suppliers and workers)

Answer 51

Labour and Material – Payment Bond

Question 52

Payment bonds are typically required in two situations:

Answer 52

the owner requires one from the contractor the contractor requires one from its major subcontractors

Question 53

What are the Three C's

Answer 53

1. Cash 2. character 3. capacity

Question 54

What does the bid bond promise to the owner?

Answer 54

– Promise to owner that contractor will enter into a binding contract B if awarded the work – Promise to provide required bonds for construction contract – Failing to provide any of these contractor forfeits the face value of the bid bond

Question 55

What is the limit of liability of a surety if the contractor defaults (performance bond)?

Answer 55

Surety would be expected to complete the project under the terms of the performance bond

Question 56

What rights does a surety have in the event of a contractor default?

Answer 56

Surety “steps into the shoes” of the contractor and thereby it gains the rights of the contractor had in the construction contract.

Question 57

ASTTBC code of ethics

Answer 57

1. Act in public best interest 2. Known your limits 3. Follow the law 4. Follow the standards of government + ASTTBC 5. State qualifitication accuracy

Question 58

The line between legal and illegal

Answer 58

Ethics

Question 59

tend to define appropriate behavior for a society (Norms in society)

Answer 59

Morals

Question 60

relate to the appropriate behavior of professionals in work settings

Answer 60

Ethics

Question 61

What is the purpose of the code of ethics for professional organizations?

Answer 61

1. compentence 2. trust+professional responsibility 3. Ethics+moral

Question 62

Why do professional organizations have a need for code of ethics?

Answer 62

Law is considered to be the minimal acceptable behavior Ethical codes provided unified document that should be used for all members Formal standards of conduct

Question 63

Self Test

Answer 63

Would it harm someone is it legal is it honest is it consistently with the code of ethics am I comfortable

Question 64

8 Part test

Answer 64

- Peer test - newspaper test - Values test - Safety test - Law test - family test - Gut test Community test