Construction Contract Quiz

What is the main characteristic of a Fixed Price (FP) contract?

• Guaranteed price for all work

• Actual cost of labor and materials

• Payment based on cost plus a management fee

• Negotiated price after construction

When is a Cost Reimbursement (CR) contract typically used?

• When the project requires competitive bidding

• When the client wants to influence the execution of works

• When the project has a clear and accurate design

• When the owner wants to make minor changes in the plans

What is the main advantage of a Fixed Price (FP) contract?

• Provides the owner with a specific sum of money

• Incentivizes the contractor to finish the job

• Requires additional oversight and administration

• Encourages excessive design changes by the owner

What is the main disadvantage of a Cost Reimbursement (CR) contract?

• Lack of incentive to finish the job

• Encourages specification of high-cost features

• Requires the buyer to invest more in design and specification

• Involves negotiation for the contract

How are Fixed Price (FP) contracts typically evaluated?

• Through cost control and administration

• Through pre-qualification and selection of subcontractors

• Through negotiation

• Through competitive bidding

What is the purpose of using standard form construction contracts?

• To increase project delays

• To limit the powers of the contract administrator

• To complicate legal endeavors

• To reduce disputes

Which type of contract involves the contractor being reimbursed for actual costs plus a special fee for head office overheads and profit?

• Design and construct contract

• Management contract

• Cost/reimbursement contract

• Lump-sum contract

What is the main characteristic of a lump-sum contract?

• The price is subject to adjustment in any circumstances

• The contractor agrees to carry out the building works for a pre-agreed price

• The contractor is paid a share for any saving between target and actual cost

• The contractor is reimbursed for actual costs plus a special fee

Which standard form of contract is widely used in the Malaysia building industry?

• FIDIC

• PAM

• PWD

• CIDB

What is the importance of understanding the contents of standard form construction contracts?

• To complicate project management

• To increase disputes

• To limit the powers of the contract administrator

• To reduce disputes