DBIA Risk Management and Allocation 2 — Questions and Answers
Question 1: In design-build, which risk allocation principle holds that risks should be assigned to the party best able to control and manage them?
- Equitable risk sharing (Correct answer)
- Risk retention doctrine
- Risk-benefit alignment
- Shared savings model
Correct answer: Equitable risk sharing
Equitable risk sharing means risks are allocated to the party best positioned to control, manage, and mitigate them.
Question 2: A design-build contract includes a differing site conditions clause. Which category covers conditions materially different from those indicated in the contract documents?
- Type II conditions
- Type I conditions (Correct answer)
- Force majeure events
- Owner-retained risks
Correct answer: Type I conditions
Type I differing site conditions are those materially different from what is indicated or reasonably inferable from the contract documents.
Question 3: When the design-builder assumes design liability in a lump-sum contract, which insurance product specifically covers errors and omissions in the design?
- General liability insurance
- Builders risk insurance
- Professional liability (E&O) insurance (Correct answer)
- Umbrella liability insurance
Correct answer: Professional liability (E&O) insurance
Professional liability (Errors & Omissions) insurance covers claims arising from design mistakes or negligence by the design-builder.
Question 4: Which risk response strategy involves the design-build team negotiating a contingency allowance within the contract price?
- Risk avoidance
- Risk transfer
- Risk acceptance with active mitigation
- Risk retention (Correct answer)
Correct answer: Risk retention
Risk retention with a contingency allowance means the team accepts known risks and budgets for them rather than eliminating or transferring them.
Question 5: Under DBIA best practices, who is primarily responsible for developing the risk register during the pre-award phase?
- The surety company
- The lead designer only
- The design-build team collaboratively (Correct answer)
- The owner's independent reviewer
Correct answer: The design-build team collaboratively
DBIA best practices emphasize collaborative development of the risk register by the entire design-build team during pre-award.
Question 6: An owner includes a 'no damage for delay' clause in a design-build RFP. What risk does this clause primarily transfer to the design-builder?
- Design defect risk
- Schedule delay cost risk (Correct answer)
- Force majeure risk
- Differing site condition risk
Correct answer: Schedule delay cost risk
A 'no damage for delay' clause transfers the financial risk of schedule delays caused by the owner to the design-builder.
Question 7: In a design-build project, which document best serves as the primary vehicle for defining the boundary between owner-retained risks and design-builder risks?
- The basis of design report
- The project risk register
- The Request for Proposal and resulting contract (Correct answer)
- The geotechnical baseline report
Correct answer: The Request for Proposal and resulting contract
The RFP and resulting contract are the foundational documents that legally define which risks each party retains or assumes.
DBIA Risk Management and Allocation 2
In design-build, which risk allocation principle holds that risks should be assigned to the party best able to control and manage them?