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Project Conception & Delivery > Project Budget > Flashcards

Project Budget Flashcards

1
Q

public project funding

A

Typically from tax revenue and/ or the sales of bonds. Tax revenues are the prerogative of the governing agency to spend on services and facilities that best serve the public.

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2
Q

Typically from tax revenue and/ or the sales of bonds. Tax revenues are the prerogative of the governing agency to spend on services and facilities that best serve the public.

A

public project funding

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3
Q

private project funding

A

May use money already on-hand or loans. When loans are the source, there may be short-term construction loan as well as a long-term permanent loan.

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4
Q

May use money already on-hand or loans. When loans are the source, there may be short-term construction loan as well as a long-term permanent loan.

A

private project funding

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5
Q

project budget

A

for all the programming, design, procurement, construction, and occupancy costs - all costs associated with the project.

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6
Q

for all the programming, design, procurement, construction, and occupancy costs - all costs associated with the project.

A

project budget

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7
Q

hard costs

A

tangible components of the completed project:
* Cost of extending utilities to the project site
* Demolition costs
* Construction costs, including materials, labor, tools and equipment, bonds, contractor- obtained insurance, contractor’s contingency, and contractor profit and overhead
* Cost of permanent fixtures and equipment (may be included in the construction cost)

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8
Q

tangible components of the completed project:
* Cost of extending utilities to the project site
* Demolition costs
* Construction costs, including materials, labor, tools and equipment, bonds, contractor- obtained insurance, contractor’s contingency, and contractor profit and overhead
* Cost of permanent fixtures and equipment (may be included in the construction cost)

A

hard costs

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9
Q

soft costs

A

non-tangible components and any other cost related to the project:
* Due diligence investigation costs, including geotechnical reports and site surveys
* Professional service fees, such as those for architects, engineers, and other consultants
* Jurisdictional fees, such as those for plan reviews, permits, and variances
* Financing costs associated with the financing loans
* Legal fees
* Site acquisition fees
* Relocation costs incurred for relocating to a new facility
* Cost of temporary facilities while existing facilities are being renovated or expanded
* Cost associated with terminating leases or rental agreements on existing facilities
* Site remediation and rehabilitation costs
* Hazardous material abatement costs
* Testing and inspection costs
* Advertising and public relations costs
* Owner-obtained insurance costs
* Cost of furniture, fixtures, and equipment (FF&E), which include movable items necessary to outfit the facility for its intended purpose
* Utility connection fees
* Owner’s contingency

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10
Q

non-tangible components and any other cost related to the project:
* Due diligence investigation costs, including geotechnical reports and site surveys
* Professional service fees, such as those for architects, engineers, and other consultants
* Jurisdictional fees, such as those for plan reviews, permits, and variances
* Financing costs associated with the financing loans
* Legal fees
* Site acquisition fees
* Relocation costs incurred for relocating to a new facility
* Cost of temporary facilities while existing facilities are being renovated or expanded
* Cost associated with terminating leases or rental agreements on existing facilities
* Site remediation and rehabilitation costs
* Hazardous material abatement costs
* Testing and inspection costs
* Advertising and public relations costs
* Owner-obtained insurance costs
* Cost of furniture, fixtures, and equipment (FF&E), which include movable items necessary to outfit the facility for its intended purpose
* Utility connection fees
* Owner’s contingency

A

soft costs

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11
Q

construction budget

A

accounts for the biggest portion of the project budget. A construction budget may be determined by one of the following:
* Authorized funds
* Available funds
* Estimated funds - cost per measured units

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12
Q

accounts for the biggest portion of the project budget. A construction budget may be determined by one of the following:
* Authorized funds
* Available funds
* Estimated funds - cost per measured units

A

construction budget

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13
Q

Authorized funds

A

Funds that have been authorized by a public agency or by a legislative act for a public project

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14
Q

Funds that have been authorized by a public agency or by a legislative act for a public project

A

Authorized funds

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15
Q

Available funds

A

Simply the amount the owner wants to spend on the construction of a private project

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16
Q

Simply the amount the owner wants to spend on the construction of a private project

A

Available funds

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17
Q

Estimated funds - cost per measured units

A

The total number of measured units in a private project is multiplied by a predetermined cost per measured unit, for example, dollars per square foot for an office building, dollars per guest room for a hotel, or dollars per patient room for a hospital. Estimating guides (available from various industry sources) provide the average unit costs for various project types.

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18
Q

The total number of measured units in a private project is multiplied by a predetermined cost per measured unit, for example, dollars per square foot for an office building, dollars per guest room for a hotel, or dollars per patient room for a hospital. Estimating guides (available from various industry sources) provide the average unit costs for various project types.

A

Estimated funds - cost per measured units

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19
Q

Bonds

A

provide a way of protecting the owner from a contractor’s poor performance on a project.

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20
Q

provide a way of protecting the owner from a contractor’s poor performance on a project.

A

Bonds

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21
Q

Bonds and Insurance

A

The use of bonds and insurance on a project provides for the owner, but this protection comes with a cost to the project. If an owner decides not to pay for bonds and insurance, then the owner assumes financial risk should a contractor not perform, does not pay subcontractors and suppliers, has an injury or death directly related to the project, business interruption, or damage due to the project due to fire, windstorm, collapse, or theft.

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22
Q

The use of bonds and insurance on a project provides for the owner, but this protection comes with a cost to the project. If an owner decides not to pay for bonds and insurance, then the owner assumes financial risk should a contractor not perform, does not pay subcontractors and suppliers, has an injury or death directly related to the project, business interruption, or damage due to the project due to fire, windstorm, collapse, or theft.

A

Bond and Insurance

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23
Q

Contingencies

A

account for the unquantifiable effects of unknowns, such as funding sources, weather, labor and material shortages during construction, governmental and regulatory restrictions, and construction delays related to known and unknown geological conditions and the possible presence of hazardous materials.

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24
Q

account for the unquantifiable effects of unknowns, such as funding sources, weather, labor and material shortages during construction, governmental and regulatory restrictions, and construction delays related to known and unknown geological conditions and the possible presence of hazardous materials.

A

Contingencies

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25
Q

surety bonds

A

Three types: bid bonds, performance bonds, payment bonds

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26
Q

Three types: bid bonds, performance bonds, payment bonds

A

surety bonds

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27
Q

Principal

A

The party who has the primary obligation to perform the undertaking that is being bonded. EX: the contractor on a bonded construction project is the principal.

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28
Q

The party who has the primary obligation to perform the undertaking that is being bonded. EX: the contractor on a bonded construction project is the principal.

A

Principal

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29
Q

Surety

A

Also referred to as the bonding company, the surety is the party that guarantees the principal’s performance. The surety agrees to be bound to the obligations of the principal should the principal fail to perform them

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30
Q

Also referred to as the bonding company, the surety is the party that guarantees the principal’s performance. The surety agrees to be bound to the obligations of the principal should the principal fail to perform them

A

Surety

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31
Q

Obligee.

A

the person for whose benefit the bond is written. With respect to a performance bond, the obligee is usually the owner. Some performance bonds are written in favor of more than one obligee (e.g., a subcontractor’s bond may be written for the benefit of both owner and contractor, or a contractor’s bond for the benefit of the owner and the project lender). Such bonds are called dual obligee bonds.

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32
Q

the person for whose benefit the bond is written. With respect to a performance bond, the obligee is usually the owner. Some performance bonds are written in favor of more than one obligee (e.g., a subcontractor’s bond may be written for the benefit of both owner and contractor, or a contractor’s bond for the benefit of the owner and the project lender). Such bonds are called dual obligee bonds.

A

Obligee

33
Q

Surety bond

A

a three-party agreement under which one party promises to answer for the debt or default of another. It is the written document given by the surety and principal to the obligee to guarantee a specific obligation.

34
Q

a three-party agreement under which one party promises to answer for the debt or default of another. It is the written document given by the surety and principal to the obligee to guarantee a specific obligation.

A

Surety bond

35
Q

An agreement between the principal and the surety whereby the principal guarantees the surety that the surety will incur no loss as a result of providing the bond.

A

Indemnity agreement

36
Q

Indemnity agreement

A

An agreement between the principal and the surety whereby the principal guarantees the surety that the surety will incur no loss as a result of providing the bond.

37
Q

Bonds are written with a limit
on the amount of the guarantee. This limiting amount, frequently 100 percent of the contract amount, is called the penal sum or penal amount of the bond.

A

Penal amount

38
Q

Penal amount

A

Bonds are written with a limit
on the amount of the guarantee. This limiting amount, frequently 100 percent of the contract amount, is called the penal sum or penal amount of the bond.

39
Q

Claimant

A

Commonly used to refer to a party who files a claim against the bond. Tis could be the owner or a subcontractor or supplier seeking recovery under the payment bond.

40
Q

Commonly used to refer to a party who files a claim against the bond. Tis could be the owner or a subcontractor or supplier seeking recovery under the payment bond.

A

Claimant

41
Q

Lien

A

The legal right of a party, such as a subcontractor, to claim a security interest in the project or have it sold for payment of a claim.

42
Q

The legal right of a party, such as a subcontractor, to claim a security interest in the project or have it sold for payment of a claim.

A

Lien

43
Q

Bid bonds

A

The purpose of the bid bond is to protect the owner from losing the benefit of an acceptable bid. Issuance of a bid bond commits the bidder to enter into an agreement and, if required, provide performance and payment bonds. Te bid bond is provided by the bidder at the time of the bid and is submitted with
the bid. The bid bond generally provides for a penal amount expressed either in dollars or as a percentage of the total amount of the bid. If the selected bidder fails or refuses to enter into an agreement for the price that was bid, the surety is obligated to pay the owner’s damages, up to the penal amount of the bid bond.

44
Q

The purpose of the bid bond is to protect the owner from losing the benefit of an acceptable bid. Issuance of a bid bond commits the bidder to enter into an agreement and, if required, provide performance and payment bonds. Te bid bond is provided by the bidder at the time of the bid and is submitted with
the bid. The bid bond generally provides for a penal amount expressed either in dollars or as a percentage of the total amount of the bid. If the selected bidder fails or refuses to enter into an agreement for the price that was bid, the surety is obligated to pay the owner’s damages, up to the penal amount of the bid bond.

A

Bid bonds

45
Q

Performance bonds

A

provides the most important protection for the owner by guaranteeing that if the contractor defaults, the surety will either complete the contract in accordance with its terms or provide sufficient funds, up to the penal amount of the bond, to fund such completion.

46
Q

provides the most important protection for the owner by guaranteeing that if the contractor defaults, the surety will either complete the contract in accordance with its terms or provide sufficient funds, up to the penal amount of the bond, to fund such completion.

A

Performance bonds

47
Q

Payment bond - aka a labor and materials bond

A

guarantees subcontractors, material suppliers, and others providing labor, material, and equipment to the project will be paid. Tis promise benefits the owner because it protects against mechanic’s liens and delays caused by unpaid subcontractors and suppliers. The payment bond generally provides for payments not only to parties employed by or in a direct contractual relationship with the contractor but also to sub-subcontractors and suppliers to subcontractors.

48
Q

guarantees subcontractors, material suppliers, and others providing labor, material, and equipment to the project will be paid. Tis promise benefits the owner because it protects against mechanic’s liens and delays caused by unpaid subcontractors and suppliers. The payment bond generally provides for payments not only to parties employed by or in a direct contractual relationship with the contractor but also to sub-subcontractors and suppliers to subcontractors.

A

Payment bond - aka labor and materials payment bond

49
Q
  • The bid bond protects the owner against the withdrawal of a favorable bid.
  • The suppliers and subcontractors are protected against nonpayment of amounts due to them from the contractor.
  • The owner is protected against mechanic’s liens on the project.
  • The owner is protected against default, breach of contract, and nonperformance by the contractor.
  • The owner receives the additional assurance of the stability of the contractor. Most bonded contractors are fnancially stable, and the bond guarantees that the surety will pay if the contractor fails to perform.
  • The indemnity agreement generally provides added incentive for the principals of the contractor to properly perform, as they may be personally liable to the bonding company for amounts paid on a bonded project.
  • Bonding satisfes statutory requirements for publicly funded projects.
A

Fully Bonded Project advantages

50
Q

Fully Bonded Project advantages

A
  • The bid bond protects the owner against the withdrawal of a favorable bid.
  • The suppliers and subcontractors are protected against nonpayment of amounts due to them from the contractor.
  • The owner is protected against mechanic’s liens on the project.
  • The owner is protected against default, breach of contract, and nonperformance by the contractor.
  • The owner receives the additional assurance of the stability of the contractor. Most bonded contractors are fnancially stable, and the bond guarantees that the surety will pay if the contractor fails to perform.
  • The indemnity agreement generally provides added incentive for the principals of the contractor to properly perform, as they may be personally liable to the bonding company for amounts paid on a bonded project.
  • Bonding satisfes statutory requirements for publicly funded projects.
51
Q

Workers compensation

A

Employee protection by an employer for employment related injuries

52
Q

Employee protection by an employer for employment-related injuries

A

Workers Compensation

53
Q

who is responsible for acquiring workers compensation?

A

Owner, Architect, Consultants, Contrac­ tor, Subcontractors, Product Represen­ tatives, and any other company with employees involved with the project

54
Q

General Liability

A

Business protection against claims involving bodily injury and property damage as a result of business services or operations

55
Q

Business protection against claims involving bodily injury and property damage as a result of business services or operations

A

General Liability

56
Q

Who is responsible for acquiring General Liability

A

Owner, Architect, Consultants, Contrac­ tor, Subcontractors, Product Represen­ tatives, and any other company with employees involved with the project

57
Q

Owners Protective Liability

A

Additional coverage for general liability associated with the construction project

58
Q

Additional coverage for general liability associated with the construction project

A

Owner’s Protective Liability

59
Q

Who is responsible for acquiring Owner’s Protective Liability

A

Owner, but may be obtained by Contractor for Owner if required by the construction contract

60
Q

Builder’s Risk (All-Risk)

A

Protection of buildings under construction for damages caused by all listed perils, that may include fire, windstorm, collapse, vandalism, and theft. Exclusions may include earthquake, flood, loss of use or occupancy, penalties for non-compliance or non-completion, normal wear and tear, latent defects, faulty workmanship or design.

61
Q

Protection of buildings under construction for damages caused by all listed perils, that may include fire, windstorm, collapse, vandalism, and theft. Exclusions may include earthquake, flood, loss of use or occupancy, penalties for non-compliance or non-completion, normal wear and tear, latent defects, faulty workmanship or design.

A

Builder’s Risk (All-Risk)

62
Q

Builder’s Risk (Named Peril)

A

Protection of buildings under construction for damages caused by a specific peril

63
Q

Protection of buildings under construction for damages caused by a specific peril

A

Builder’s Risk (Named Peril)

64
Q

Who is responsible for acquiring Builder’s Risk (Named Peril)

A

The owner

65
Q

Who is responsible for acquiring Builder’s Risk (All-Risk)

A

The Owner, but may be obtained by Contractor for owner if required by the construction contract.

66
Q

Boiler and Machinery

A

Protection against loss from accidents or breakdowns involving boilers, pressure vessels and other business-related equipment

67
Q

Who is responsible for acquiring Boiler and Machinery insurance

A

The owner, but may be obtained by Contractor for owner if required by the construction contract

68
Q

Contractor’s Tool and Equipment

A

Protection against lost, stolen or damaged tools and equipment used by the contractor

69
Q

Protection against lost, stolen or damaged tools and equipment used by the Contrator

A

Contractor’s Tool and Equipment

70
Q

who is responsible for acquiring Insurance for Contractor’s tools and equipment

A

The contractor

71
Q

Business Interruption Insurance

A

Covers the loss of income that a business suffers following a disaster

72
Q

Covers the loss of income that a business suffers following a disaster

A

Business Interruption Insurance

73
Q

Who is responsible for acquiring Business interruption insurance

A

The owner

74
Q

Umbrella Excess Liability

A

Provides supplemental coverage that general liability and automobile policies will not cover

75
Q

Provides supplemental coverage that general liability and automobile policies will not cover

A

Umbrella Excess Liability

76
Q

Who is responsible for acquiring Umbrella Excess Liability

A

Any party that wants the added protection

77
Q

Owner or Contractor Controlled Insurance

A

provides coverage for vitally all liability and loss associated with a construction project.

78
Q

Provides coverage for virtually all liability and loss associated with a construction project

A

Owner or Contractor Controlled Insurance

79
Q

Who is responsible for acquiring owner or contractor controlled insurance

A

The owner or contractor

Project Conception & Delivery (3 decks)

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