CCP CCP Change Management and Claims 1 — Questions and Answers
Question 1: A constructive change in construction cost management refers to:
- An owner action or inaction that changes the scope without a formal change order (Correct answer)
- A written directive issued by the owner to modify the contract
- A contractor-initiated value engineering proposal
- A formal claim filed after project completion
Correct answer: An owner action or inaction that changes the scope without a formal change order
A constructive change occurs when the owner's conduct — such as defective specifications or interference — effectively changes the work without issuing a formal change order.
Question 2: Which of the following is the correct sequence for processing a formal change order in project cost management?
- Identify change → Estimate cost impact → Negotiate → Execute change order (Correct answer)
- Execute change order → Identify change → Estimate cost → Negotiate
- Negotiate → Identify change → Execute change order → Estimate cost
- Estimate cost → Execute change order → Identify change → Negotiate
Correct answer: Identify change → Estimate cost impact → Negotiate → Execute change order
The standard process is to identify the change, estimate its cost and schedule impact, negotiate with the owner, and then execute the written change order.
Question 3: What is the primary purpose of a Rough Order of Magnitude (ROM) estimate in the change management process?
- To provide early high-level cost impact information for decision-making before detailed pricing (Correct answer)
- To serve as the final negotiated price for a change order
- To calculate liquidated damages for late changes
- To document actual costs incurred due to an owner-directed change
Correct answer: To provide early high-level cost impact information for decision-making before detailed pricing
A ROM estimate gives stakeholders a preliminary cost range (typically ±25-50%) to decide whether to proceed with a potential change before investing in detailed pricing.
Question 4: 'Cardinal change' in contract law refers to a change that is so significant it:
- Effectively abandons the original contract and may excuse the contractor from performance (Correct answer)
- Requires a new subcontract to be issued
- Must be approved by the project owner's board of directors
- Triggers automatic escalation clauses in the contract
Correct answer: Effectively abandons the original contract and may excuse the contractor from performance
A cardinal change alters the fundamental nature of the contract to such a degree that the contractor may treat it as a breach and seek damages beyond the change order mechanism.
Question 5: A contractor submits a Request for Equitable Adjustment (REA) primarily to:
- Recover additional cost and/or time caused by government-directed changes or actions (Correct answer)
- Propose a voluntary value-engineering cost saving to the owner
- Request an extension of the bid submission deadline
- Notify the owner of a potential schedule delay by a subcontractor
Correct answer: Recover additional cost and/or time caused by government-directed changes or actions
An REA is a request submitted by a contractor to adjust the contract price or schedule when a government or owner action causes additional cost or delay.
Question 6: In project cost management, 'scope creep' is best controlled by:
- A rigorous change control process that formally evaluates and prices all scope additions (Correct answer)
- Allowing minor additions without change orders to maintain owner relations
- Absorbing small changes into contingency reserves
- Accelerating the schedule to finish before additional requests arrive
Correct answer: A rigorous change control process that formally evaluates and prices all scope additions
Scope creep is controlled by requiring all changes to go through a formal change control process so impacts on cost and schedule are captured and compensated.
CCP CCP Change Management and Claims 1
A constructive change in construction cost management refers to: