Engineering Economics & Contract Management Flashcards
7 cards from real CPE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Engineering Economics & Contract Management flashcards as text
A contractor submits a claim for 'constructive acceleration.' This means:
Answer: The owner directed faster work without a formal order
Constructive acceleration occurs when an owner implicitly demands faster progress (e.g., by denying valid time extensions) without issuing a formal written directive.
If a project's NPV is zero, the actual return on investment equals:
Answer: The discount rate used
When NPV = 0, the project's cash flows exactly recover the investment at the applied discount rate, meaning the actual return equals that discount rate (the IRR).
A 'no-damages-for-delay' clause in a contract:
Answer: Limits the contractor's remedy for owner-caused delays to time only
A no-damages-for-delay clause restricts the contractor's recovery for owner-caused delays to schedule extensions, barring monetary compensation.
The economy of scale concept in engineering economics states that:
Answer: Larger facilities typically have lower unit costs than smaller ones
Economy of scale occurs because fixed costs are spread over more units and certain efficiencies emerge at larger capacities, reducing per-unit cost.
Under a unit-price contract, the owner carries the risk of:
Answer: Quantity variations from estimated amounts
In a unit-price contract, the owner bears the quantity risk because total payment depends on actual measured quantities, which may differ from bid estimates.
The concept of 'break-even analysis' in engineering economics determines:
Answer: The point where total revenue equals total cost
Break-even analysis finds the output level or cost threshold where total revenue exactly covers total costs, resulting in zero profit or loss.
A contract's 'differing site conditions' clause (Type I) protects the contractor when:
Answer: Site conditions differ materially from those described in the contract documents
A Type I differing site condition claim applies when actual subsurface or latent physical conditions differ materially from conditions indicated in the contract.