CCM Contract Administration 3 — Questions and Answers
Question 1: A contractor submits a pay application that includes costs for stored materials not yet incorporated into the work. Under what condition should the CM certify payment for these materials?
- Never — payment is only for work in place
- Only if the materials are stored on-site and properly protected (Correct answer)
- Only if the owner has approved the stored materials provision in the contract
- Only if the materials are stored off-site in a bonded warehouse
Correct answer: Only if the materials are stored on-site and properly protected
Payment for stored materials on-site is typically allowed when materials are properly protected, suitably stored, and evidence of ownership/insurance is provided.
Question 2: What is the purpose of a Construction Change Directive (CCD) as opposed to a standard Change Order?
- A CCD is used when the owner and contractor disagree on price, allowing work to proceed while the cost is resolved (Correct answer)
- A CCD is issued by the contractor when the owner fails to approve a change in time
- A CCD allows the architect to modify design drawings without owner approval
- A CCD establishes the final cost of disputed extras after arbitration
Correct answer: A CCD is used when the owner and contractor disagree on price, allowing work to proceed while the cost is resolved
A CCD directs the contractor to proceed with changed work even when the parties haven't agreed on compensation, with the cost to be determined later.
Question 3: Under typical contract terms, when does the risk of loss for materials pass from the contractor to the owner?
- When the contractor delivers materials to the project site
- When the materials are incorporated into the permanent work and the owner accepts them (Correct answer)
- Upon substantial completion of the entire project
- When the owner makes payment for the materials in a certified pay application
Correct answer: When the materials are incorporated into the permanent work and the owner accepts them
Risk of loss generally transfers when materials become part of the permanent work and the owner accepts that portion, though contract language may vary.
Question 4: A subcontractor notifies the general contractor of a potential delay caused by late delivery of owner-furnished equipment. Under the contract, the GC should:
- Absorb the delay and adjust the schedule without formal notice
- Issue a formal written notice of delay to the owner within the contractually specified period (Correct answer)
- File a claim directly with the equipment supplier
- Accelerate other work to offset the anticipated delay without notifying the owner
Correct answer: Issue a formal written notice of delay to the owner within the contractually specified period
Timely written notice of delay is a contractual prerequisite to recovering delay damages or time extensions; failure to notify may waive the right to relief.
Question 5: What is 'retainage' in a construction contract, and what is its primary purpose?
- A fee paid to the CM for managing the project, retained from the contractor's payment
- A percentage withheld from progress payments to incentivize completion and ensure quality (Correct answer)
- Funds set aside in escrow for payment of subcontractors
- A contingency amount held by the owner for unforeseen conditions
Correct answer: A percentage withheld from progress payments to incentivize completion and ensure quality
Retainage is a percentage (typically 5-10%) withheld from each progress payment to encourage the contractor to complete all work and protect the owner from incomplete or defective work.
Question 6: Which scheduling method is most commonly required on large public construction projects and provides a network-based analysis of project activities?
- Bar chart (Gantt chart) scheduling
- Critical Path Method (CPM) scheduling (Correct answer)
- Linear scheduling method (LSM)
- Monte Carlo simulation scheduling
Correct answer: Critical Path Method (CPM) scheduling
CPM scheduling is required on most large public projects because it identifies the critical path, shows activity dependencies, and supports delay analysis and claims resolution.
Question 7: When a contractor requests an equitable adjustment for acceleration costs, which of the following must the contractor typically prove?
- That the owner expressly ordered acceleration in writing
- That an excusable delay existed and the owner directed acceleration to recover lost time (Correct answer)
- That the contractor submitted a recovery schedule within 14 days of the delay
- That the additional costs exceed 10% of the original contract sum
Correct answer: That an excusable delay existed and the owner directed acceleration to recover lost time
A constructive acceleration claim requires proof of an excusable delay, the contractor's timely request for a time extension, owner denial or failure to act, and resulting additional costs.
CCM Contract Administration 3
A contractor submits a pay application that includes costs for stored materials not yet incorporated into the work.
Under what condition should the CM certify payment for these materials?