CCM Contract Administration 4 — Questions and Answers
Question 1: A contractor discovers buried fuel tanks not shown on the contract drawings during excavation. This situation is best described as:
- A force majeure event entitling the contractor to a no-cost time extension only
- A Type II differing site condition where actual conditions differ materially from those ordinarily encountered (Correct answer)
- A design error for which the architect bears full liability
- An unforeseen condition not covered under the contract, precluding any recovery
Correct answer: A Type II differing site condition where actual conditions differ materially from those ordinarily encountered
Buried tanks unknown to both parties represent a Type II differing site condition — conditions that differ materially from those ordinarily encountered in similar work.
Question 2: In construction contract administration, what is the 'cardinal change' doctrine?
- A rule requiring all changes over $50,000 to be reviewed by the owner's legal team
- A legal principle that a change so significant it alters the fundamental nature of the contract may void it (Correct answer)
- An AIA provision requiring architect approval before the owner can issue any change order
- A public contracting rule limiting total change orders to 25% of the original contract value
Correct answer: A legal principle that a change so significant it alters the fundamental nature of the contract may void it
The cardinal change doctrine holds that a change so substantial it alters the nature of the work originally contracted may constitute a breach of contract rather than a permissible change.
Question 3: Under the AIA A201 General Conditions, what is the contractor's obligation regarding safety programs on the project site?
- Safety is the owner's responsibility as site occupant
- The contractor is solely responsible for initiating, maintaining, and supervising all safety precautions and programs (Correct answer)
- The CM shares equal safety responsibility with the contractor
- The architect must review and approve the contractor's safety plan
Correct answer: The contractor is solely responsible for initiating, maintaining, and supervising all safety precautions and programs
AIA A201 assigns the contractor sole responsibility for safety programs, precautions, and compliance with applicable laws; the owner and architect are not responsible for safety means and methods.
Question 4: A pay application submitted by the contractor includes a lien waiver. What is the significance of this document for the owner?
- It confirms the contractor has met all OSHA safety requirements for the pay period
- It releases the owner's property from potential liens by the contractor for that payment period (Correct answer)
- It certifies that all subcontractors have been paid from the previous draw
- It obligates the owner to make payment within 7 days of receipt
Correct answer: It releases the owner's property from potential liens by the contractor for that payment period
A lien waiver protects the owner's property by releasing the contractor's (and potentially subcontractors') right to file a mechanic's lien for amounts covered by the payment.
Question 5: What is the function of a 'no-damage-for-delay' clause in a construction contract?
- It allows the owner to assess liquidated damages for any delays regardless of cause
- It contractually limits the contractor's remedy for owner-caused delays to a time extension only, excluding monetary compensation (Correct answer)
- It prohibits the owner from delaying the contractor's access to the site
- It caps the total delay damages recoverable by either party at 5% of the contract sum
Correct answer: It contractually limits the contractor's remedy for owner-caused delays to a time extension only, excluding monetary compensation
A no-damage-for-delay clause limits the contractor's remedy for most owner-caused delays to additional time, not additional compensation, though courts recognize exceptions for active interference.
Question 6: Which contract delivery method gives the construction manager a guaranteed maximum price (GMP) and transfers financial risk to the CM if costs exceed that amount?
- CM as Advisor (Agency CM)
- Design-Bid-Build with stipulated sum contract
- CM at-Risk (CMAR) (Correct answer)
- Integrated Project Delivery (IPD)
Correct answer: CM at-Risk (CMAR)
Under CM at-Risk, the CM provides a GMP commitment and assumes the risk of cost overruns above that ceiling, similar to a general contractor's role.
Question 7: When reviewing a contractor's pay application, the CM determines that the contractor has over-billed for work in place. The CM should:
- Reject the entire pay application and require resubmittal
- Certify only the amount the CM determines to be accurately represented and notify the contractor of the adjustment (Correct answer)
- Pay the full amount to avoid delaying the contractor's cash flow, then recover the overpayment later
- Request the owner's approval before certifying any portion of the disputed application
Correct answer: Certify only the amount the CM determines to be accurately represented and notify the contractor of the adjustment
The CM should certify the accurate amount, document the basis for the adjustment, and promptly notify the contractor in writing to allow correction and resubmittal.
CCM Contract Administration 4
A contractor discovers buried fuel tanks not shown on the contract drawings during excavation.
This situation is best described as: