Deck 5: Contract Management for Complex Projects

Question 1

Behaviour oriented contracts specify which of the following? 

A) How the contractor should deliver the work. 
B) Why the contractor should deliver the work. 
C) Where the contractor should deliver the work. 
D) When the contractor should deliver the work.

Answer 1

  A

Question 2

Complex construction projects require which of the following? 

A) Management. 
B) Professional contract management. 
C) Suppliers. 
D) Materials.

Answer 2

  B

Question 3

Which of the following best explains 'conflict of interest'? 

A) Buyer wants to pay as little as possible and seller charge as much as possible. 
B) Buyer wants to pay as much as possible and the seller charge as little as possible. 
C) Buyer wants the same things as the seller. 
D) Seller wants the same things as the buyer.

Answer 3

  A

Question 4

Which of the following best explains 'conflict system'? 

A) Contractual relationship where parties pursue different objectives. 
B) Contractual relationship where parties pursue the same objectives. 
C) Contractual relationship where parties dispute the contract details. 
D) Contractual relationship where one party fails to meet their contractual requirements.

Question 5

Which of the following best explains 'co-operative system'? 

A) Contractual relationship where parties pursue different objectives. 
B) Contractual relationship where parties act rationally in the name of a common objective. 
C) Contractual relationship where parties dispute the contract details. 
D) Contractual relationship where one party fails to meet their contractual requirements.

Question 6

Which of the following is a stage of contract management? 

A) Concept. 
B) Independent evaluation. 
C) Post-contractual. 
D) Research.

Question 7

Which of the following is an example of a large infrastructure project? 

A) Highways. 
B) An office redecoration. 
C) A roof repair. 
D) Re-surfacing the car park.

Question 8

Which of the following is an example of a large infrastructure project? 

A) Refurbishing the toilets. 
B) Bridge construction. 
C) A roof repair. 
D) Re-surfacing the car park.

Question 9

Which of the following best explains 'contracting'? 

A) Engaging in contractual relationships with one or more parties. 
B) Asking for the services of another organisation. 
C) Decreasing the size of the organization. 
D) Doing everything yourself.

Question 10

Which of the following is an example of a large infrastructure project? 

A) A roof repair. 
B) An office redecoration. 
C) Building a port. 
D) Re-surfacing the car park.

Question 11

Which of the following is a stage of contract management? 

A) Research. 
B) Contract negotiations. 
C) Concept. 
D) Independent evaluation.

Question 12

Which of the following best explains 'agent opportunism'? 

A) Where the agent is flexible in terms of contract pricing. 
B) Where the agent is flexible in relation to delivery dates. 
C) Where the agent will act primarily out of self-interest. 
D) Where the agent is fully compliant with the contractual requirements.

Question 13

Which of the following best explains 'contract management'? 

A) Engaging in contractual relationships with one or more parties. 
B) Asking for the services of another organisation. 
C) Decreasing the size of the organization. 
D) The process that ensures all parties to a contract fully meet their obligations.

Question 14

Which of the following best describes the concept of bounded rationality in the context of contracts? 

A) Complete information available to decision takers. 
B) All options appraised. 
C) Objectivity. 
D) Different contractual perspectives due to incomplete information and self-interest.

Question 15

Which of the following best explains 'moral hazard'? 

A) Risks not subject to systematic assessment. 
B) Risks that both contractual parties will primarily pursue their own interest. 
C) Risk that one party will pursue their own interest. 
D) Risk of a breach of legislation.

Question 16

Which of the following is not a requirement of complex construction projects? 

A) Professional contract management. 
B) Multiple decision-takers. 
C) Professional procurement. 
D) Professional project management.

Question 17

Complex construction projects require which of the following? 

A) Suppliers. 
B) Budgets. 
C) Professional procurement. 
D) Materials.

Question 18

Complex construction projects require which of the following? 

A) Professional project management. 
B) Budgets. 
C) Suppliers. 
D) Materials.

Question 19

Which of the following is a stage of contract management? 

A) Independent evaluation. 
B) Political approval. 
C) Deciding to decide. 
D) Pre-contractual.

Question 20

Which of the following best explains 'outcome-oriented contract'? 

A) How the contractor should deliver the work. 
B) Specification of desired outcomes of contractor work. 
C) Where the contractor should deliver the work. 
D) Specification of required inputs.

Question 21

Which of the following best explains 'reimbursable time and materials contracts'? 

A) Contractor receives a fixed sum per annum. 
B) Contractor receives a fixed sum per month. 
C) Contractor receives a variable sum based on work completed. 
D) Contractor receives a fixed sum per unit of work completed.

Question 22

Which of the following best explains 'network perspective'? 

A) Contracts are closed based on recognizing interests of key supply chain partners. 
B) Contracts are open to any seller in the supply chain network. 
C) Contracts are closed recognizing value network interdependencies. 
D) Contracts are based on interests of seller only.

Question 23

Which of the following best explains 'design and construct contract'? 

A) Contractor designs and provides in accordance with the client's requirements, plant and/or other works. 
B) Contractor constructs the project in accordance with the design provided by the client. 
C) Contractor delivers project or work turnkey. 
D) Contractor completes work at own risk and gets paid long-term payments after delivery.

Question 24

Which of the following best explains 'value chain perspective'? 

A) Contracts are closed based on recognizing interests of key supply chain partners. 
B) Contracts are open to any seller in the supply chain. 
C) Contracts are closed based upon the client's key interests and requirements. 
D) Contracts are based on interests of seller only.

Question 25

Which of the following best explains 'liquidated damages'? 

A) Written guarantee from a third-party guarantor. 
B) The contractor guarantees the actual output or outcome of the work to be delivered. 
C) Holding company secures payment for agreed sum in case business unit fails to make payments. 
D) Sum that will be paid in case the contractor fails to deliver works according to the client's specifications.

Question 26

Which of the following best explains 'basic design and engineering'? 

A) Activities needed to formulate a concept. 
B) Activities needed to develop technical specification of the work. 
C) Activities need to evaluate a project. 
D) Activities need to implement a technical specification.

Question 27

Which of the following best explains 'design-build-finance-maintain (DBFM) contract'? 

A) Contractor designs and provides in accordance with the client's requirements, plant and/or other works. 
B) Contractor constructs the project in accordance with the design provided by the client. 
C) Contractor delivers project or work turnkey. 
D) Contractor completes work at own risk and gets paid long-term payments after delivery.

Question 28

Which of the following best explains 'milestone payments'? 

A) Payments for wages and salaries of key managers and workers. 
B) Payments made based on deliveries made for each project planning stage. 
C) Monthly payments 
D) Weekly payments.

Question 29

Which of the following best explains 'tendering'? 

A) Activities needed to select contractor for the work based on competitive bids. 
B) Activities needed to develop technical specification of the work. 
C) Activities needed to select contractor. 
D) Activities need to implement a technical specification.

Question 30

Which of the following best explains 'construction-only contract'? 

A) Contractor designs and provides in accordance with the client's requirements, plant and/or other works. 
B) Contractor constructs the project in accordance with the design provided by the client. 
C) Contractor delivers project or work turnkey. 
D) Contractor completes work at own risk and gets paid long-term payments after delivery.

Question 31

Which of the following best explains 'dyadic perspective'? 

A) Contracts are closed based on interests of seller only. 
B) Contracts are open to any seller. 
C) Contracts are closed based upon interests of buyer and seller only. 
D) Contracts are based on interests of buyer only.

Question 32

Which of the following best explains 'contract for design-procure-construct (EPC)'? 

A) Contractor designs and provides in accordance with the client's requirements, plant and/or other works. 
B) Contractor constructs the project in accordance with the design provided by the client. 
C) Contractor delivers project or work turnkey. 
D) Contractor completes work at own risk and gets paid long-term payments after delivery.

Question 33

Which of the following is an element of cost-reimbursable contracts? 

A) Wages and salaries of key managers and workers. 
B) Contractor losses incurred. 
C) Costs of contractor future investments. 
D) Costs of unsuccessful bidders.

Question 34

Which of the following best explains 'concern guarantee'? 

A) Guarantee issue by supplier. 
B) Guarantee issued by the bank of the supplier. 
C) Holding company secures payment for agreed sum in case business unit fails to make payments. 
D) Business unit guarantees to pay holding company.

Question 35

Which of the following best explains 'supply chain perspective'? 

A) Contracts are closed based on recognizing interests of key supply chain partners. 
B) Contracts are open to any seller in the supply chain. 
C) Contracts are closed based upon interests of buyer. 
D) Contracts are based on interests of seller only.

Question 36

Which of the following best explains 'bank guarantee'? 

A) Guarantee issue by supplier. 
B) Guarantee issued by the bank of the supplier. 
C) Guarantee issued by the purchaser. 
D) Guarantee issued by the bank of the purchaser.

Question 37

Which of the following best explains 'performance bond'? 

A) Written guarantee from a third-party guarantor. 
B) Guarantee issued by the bank of the supplier. 
C) Holding company secures payment for agreed sum in case business unit fails to make payments. 
D) Business unit guarantees to pay holding company.

Question 38

Which of the following best explains 'fixed price contract'? 

A) Contractor is allowed to fix the price of the contract. 
B) Contractor has the price fixed by a third party. 
C) Contractor can vary the price during the contract. 
D) Contractor agrees to work based on a fixed contract.

Question 39

Which of the following best explains 'performance guarantee'? 

A) Written guarantee from a third-party guarantor. 
B) The contractor guarantees the actual output or outcome of the work to be delivered. 
C) Holding company secures payment for agreed sum in case business unit fails to make payments. 
D) Business unit guarantees to pay holding company.

Question 40

Which of the following best explains 'unit rate/charter contracts'? 

A) Contractor agrees to work based upon compensation of all actual costs incurred plus profit margin. 
B) Contractor agrees to work based upon compensation of all actual cost. 
C) Contractor agrees to work based on projected costs only. 
D) Contractor agree to work based on outcome of further negotiations.

Question 41

Which of the following is a cause of 'agency problem'? 

A) Conflict of interest between buyer and seller due to conflicting goals. 
B) Sub-contractors fail to meet project milestones. 
C) Detailed project engineering and planning problems. 
D) Sub-contractors failure to perform due to poor quality performance.

Question 42

In the key elements of the contracting process which element comes before subcontracting and procurement and after contract negotiation and closure? 

A) Basic design and engineering. 
B) Claims. 
C) Detailed project engineering and planning. 
D) Testing and delivery.

Question 43

In the key elements of the contracting process which element comes before claims and after testing and delivery? 

A) Maintenance and guarantee. 
B) Project execution. 
C) Detailed project engineering and planning. 
D) Claims.

Question 44

Which of the following is a cause of 'agency problem'? 

A) Sub-contractors failure to perform due to poor quality performance. 
B) Conflict of interest between buyer and seller due to information asymmetry. 
C) Detailed project engineering and planning problems. 
D) Sub-contractors failure to perform due to poor quality performance.

Question 45

Which of the following should be incorporated into the general information on supplier selection? 

A) Number of employees of suppliers. 
B) Turnover of suppliers. 
C) Contract value. 
D) How bids are evaluated.

Question 46

Which of the following best explains a 'handing invoices procedure'? 

A) A procedure incorporating a two-way matching principle (order matches delivery document and delivery document matches with invoice). 
B) A procedure incorporating a three-way matching principle (order matches delivery document, delivery document matches with invoice, invoice matches the order). 
C) A procedure incorporating a two-way matching principle (delivery document matches with invoice and invoice matches the order). 
D) A procedure incorporating a four-way matching principle (order matches delivery document, delivery document matches with invoice, invoice matches the order, invoice is paid).

Question 47

Which of the following is a cause of 'agency problem'? 

A) Sub-contractors failure to meet milestone deadlines. 
B) Conflict of interest between buyer and seller due to moral hazard. 
C) Conflict of interest between buyer and seller due to engineering and planning problems. 
D) Conflict of interest between buyer and seller due to poor quality performance.

Question 48

In the key elements of the contracting process which element comes before detailed project engineering and planning and after sending out the invitation to tender? 

A) Basic design and engineering. 
B) Contract negotiation and closure. 
C) Claims. 
D) Testing and delivery.

Question 49

Which of the following is a dimension of contract management? 

A) Information flow. 
B) Tendering. 
C) Contracting 
D) Evaluating.

Question 50

In the key elements of the contracting process which element comes before testing and delivery and after subcontracting and procurement? 

A) Basic design and engineering. 
B) Project execution. 
C) Detailed project engineering and planning. 
D) Claims.

Question 51

In the key elements of the contracting process which element comes before project execution and after detailed project engineering and planning? 

A) Basic design and engineering. 
B) Claims. 
C) Sending out the invitation to tender. 
D) Subcontracting and procurement.

Question 52

Which of the following is a dimension of contract management? 

A) Tendering. 
B) Financial flow 
C) Contracting 
D) Evaluating.

Question 53

Which of the following is a dimension of contract management? 

A) Tendering. 
B) Contracting. 
C) Goods flow. 
D) Evaluating.

Question 54

Which of the following is a cause of 'agency problem'? 

A) Sub-contractors failure to meet milestone deadlines. 
B) Conflict of interest between buyer and seller due to engineering and planning problems. 
C) Conflict of interest between buyer and seller due to risk allocation. 
D) Conflict of interest between buyer and seller due to poor quality performance.

Question 55

In the key elements of the contracting process which element comes before contract negotiation and closure and after basic design and engineering? 

A) Sending out the invitation to tender. 
B) Project execution. 
C) Claims. 
D) Testing and delivery.

Question 56

Which of the following best explains an 'order-to-pay' system? 

A) A system allowing project support staff to order materials and services using the company's corporate purchasing agreements. 
B) A system allowing orders to be placed with any supplier. 
C) A cash ordering system. 
D) A system where project support staff pay for their own orders then claim the expenditure back from their employers.

Question 57

Which of the following best explains 'back-to-back agreements'? 

A) Key subcontractor contracts reflect all conditions of the main contract. 
B) Key subcontractor secures rolling contract from purchaser. 
C) Key subcontractor is awarded two contracts to run consecutively. 
D) Key subcontractor is awarded two contracts to run concurrently.

Question 58

Which of the following best describes the way in which the four dimensions of contract management should be managed? 

A) Sequentially. 
B) One at a time. 
C) In parallel. 
D) Two at a time.

Question 59

Which of the following is the prevailing co-ordination mechanism for settling contractual disputes and conflicts? 

A) Negotiation. 
B) Arbitration. 
C) Mediation 
D) A court case.

Question 60

Which of the following is a dimension of contract management? 

A) Tendering. 
B) Contracting. 
C) Evaluating. 
D) Relationship.