CONTRACT ADMINISTRATION

Question 1

What are the six basic components of an owner-vendor agreement (or owner-contractor agreement)?

Answer 1

This document is composed of:

• the agreement itself
• the conditions of the contract (general, supplementary, and other)
• the drawings
• the specifications
• all addenda
• all modifications issued after the execution of the agreement

Question 2

What are the four types of written modifications that can be made after the execution of a contract?

Answer 2

Four examples of this are:

• a change order
• an amendment to the contract
• a written order for minor changes in the work
• a written interpretation by the interior designer

Question 3

What are five of the most common variables that can affect the cost of a project when bidding occurs?

Answer 3

This aspect of a project bid can be affected by the:

• actual costs to the contractor and subcontractors
• current competitiveness of the market
• project schedule
• desire of a contractor to get the job
• level of profit required by the contractor

Question 4

What seven types of information are typically included in the instructions to bidders?

Answer 4

This document typically gives information about:

• procedures for submitting bids
• where to obtain bidding documents
• procedures for opening bids
• submittals required with the bids
• bidders’ representation statements
• required bonds
• procedures for issuing addenda and other modifications

Question 5

What is an addendum?

Answer 5

This is a written or graphic document issued by the interior designer before the execution of the contract that modifies or interprets the bidding documents by additions, deletions, clarifications, or corrections.

Question 6

What are five of the responsibilities of the owner during furniture installation?

Answer 6

During this phase of a project, the owner is responsible for:

• providing facilities for delivery, unloading, and staging
• providing a route from the delivery point to the final placement point
• giving a firm schedule to the contractor for unloading facilities
• paying for costs due to the owner’s failure to conform to the schedule
• providing security

Question 7

What are liquidated damages?

Answer 7

These are moneys paid by the contractor to the owner for every day the contractor is late at completing a project.

Question 8

What form does a vendor or contractor use to request payment from the owner?

Answer 8

An Application for Payment form is used for this.

Question 9

What is a unit price?

Answer 9

This is a set cost for providing a portion of the construction work that is based on an individual quantity, such as per unit or per square foot.

Question 10

What is retainage (also called holdback in Canada)?

Answer 10

This is a percentage (usually 10%) of each payment to a contractor or vendor that is withheld by the owner for the purpose of protecting the owner against incomplete or defective work.

Question 11

At the owner’s request, a contractor may include alternates in the bid documents. What is an alternate?

Answer 11

This is a construction item that could, at the owner’s discretion, be substituted for a similar item in the base bid to reduce project costs.

Question 12

If all bids on a project exceed the owner’s budget, what four options are available to the owner?

Answer 12

If this happens, the owner can:

• rebid (or renegotiate) the contract
• authorize an increase in construction costs
• work with the designer to reduce the scope of the project
• abandon the project

Question 13

What is the purpose of a labor and material payment bond?

Answer 13

This is used to guarantee payment for labor and materials on a project if the contractor defaults or otherwise fails to make payments.

Question 14

Under what conditions can a contractor propose substitutions during bidding?

Answer 14

Bidders must request written approval of these at least 10 days before bid opening. The request must include documentation showing that the proposal meets the requirements of the contract documents.

Question 15

What is a performance bond?

Answer 15

This is a statement by a surety company that obligates the surety company to complete construction of the owner’s project if the contractor defaults.

Question 16

What is bid security?

Answer 16

This is a certified check, cashier’s check, or bid bond requested by the owner to ensure that the successful bidder will fulfill the contract.

Question 17

What are the four primary advantages of negotiating a contract?

Answer 17

Some of the advantages of this process include:

• the owner can use a specific contractor
• a realistic project cost is developed from the beginning
• the contractor can assist in reducing the cost of the project
• the contractor can point out potential problems in the design

Question 18

In regard to interior design, what is substantial completion?

Answer 18

In the construction project, this is the stage when the work, or a designated portion of it, is sufficiently complete according to the contract documents that the owner can occupy or use the site, even though a few minor items may yet need to be finished or corrected.

Question 19

What are the two common ways to notify prospective contractors that a project is being bid?

Answer 19

The two common ways to accomplish this are to:

• advertise for bids in local newspapers and trade journals
• send Invitation to Bid forms to prospective bidders.

Question 20

How is a negotiated contract different from a bid (or tendered) contract?

Answer 20

With the former, the owner selects a contractor to do the work, and the two discuss the cost and terms of the contract.

With the latter, several contractors view the contract documents and submit cost proposals.

Question 21

In regard to interior design, what is an allowance?

Answer 21

This is a set amount of money that the interior designer estimates will cover the cost of a particular item (construction or furnishing) when that cost cannot be determined precisely at the time of the bid or negotiated proposal.

Question 22

What two types of contracts are typically used on large commercial interior design projects?

Answer 22

This type of project calls for two contract types:

• construction contract
• contract for furniture, fixtures, and equipment

Question 23

What is involved in generating a fee projection?

Answer 23

In this process, the total fee the designer will receive, after amounts for profit, overhead, and other expenses are deducted, is allocated to the schedule and to the various staff members who will be completing the project.

Question 24

What are the five basic activities of project management?

Answer 24

This task involves:

• planning
• monitoring
• coordinating and directing
• documenting
• closing out a project

Question 25

In regard to interior design, what is a claim?

Answer 25

This is a demand or assertion by the contractor or owner seeking payment of money, an extension of time, or an adjustment or interpretation of the contract terms.

Question 26

What is the basic process for getting approval on submittals from subcontractors or suppliers?

Answer 26

- First the submittal is sent to the general contractor, who reviews it and then sends it to the interior designer for approval - If the submittal also requires a review by one of the designer's consultants, it is sent to the consultant for review - The submittal is then sent back to the contractor, who returns it to the party who originally made the submittal

Question 27

Who has the authority to reject work that does not conform to the contract documents?

Answer 27

The interior designer can reject work that does not conform to these.

Question 28

What are shop drawings?

Answer 28

These are detailed drawings, diagrams, and other data, prepared by a subcontractor or supplier, that show exactly how the provider intends to supply and install work to meet the contract requirements. They are submitted to the contractor and interior designer for approval.

Question 29

What part of a contract agreement may be used to include unique contract elements that modify the General Conditions of the Contract for Construction?

Answer 29

In a contract agreement, the Supplementary Conditions are used to modify these.

Question 30

What is the contract time?

Answer 30

This is the period from the starting date established in the agreement to the time of substantial completion.

Question 31

What is a change order?

Answer 31

This is a form used to authorize a change in contract time, contract cost, or both, made after the execution of the contract. It is generally prepared by the interior designer and must be signed by the designer, contractor, and owner.

Question 32

Who is responsible for making the acceptance inspection of furniture or fixtures?

Answer 32

The owner is responsible for this aspect of FF&E delivery.

Question 33

Who has the authority to stop construction?

Answer 33

On a construction project, only the owner can authorize this action.

Question 34

How is the Uniform Commercial Code (UCC) important to interior design projects?

Answer 34

This document governs the sale of goods in the United States and is applicable to the purchase and delivery of furniture and other moveable items.

Question 35

What does "FOB factory" mean?

Answer 35

This means that the title for goods purchased is transferred at the factory. The manufacturer pays for loading the goods onto a truck or train, and the buyer pays the transportation costs and is responsible for damage during shipping.

Question 36

What are six common reasons why a designer might withhold payment to a contractor?

Answer 36

This action might be taken because: - the work is defective - the contractor failed to pay the subcontractors - the contractor has damaged the property of the owner or another contractor - third-party claims have been filed - evidence exists that the work will not be completed on time - the contractor failed to conform to the contract documents

Question 37

What are seven of the items the contractor must submit to the owner during project closeout?

Answer 37

During this phase of a project, the contractor must give the owner: - the bonds - all warranties - any extra stock of materials - a set of record drawings - the certificate of occupancy - documentation required by the final application for payment - maintenance contracts and equipment operating instructions

Question 38

What is a punch list (known in Canada as a deficiency list)?

Answer 38

This is a list of items made by the interior designer during the final inspection. It includes anything that needs to be completed or corrected by the contractor if not in accordance with the contract documents.

Question 39

What is a construction change directive?

Answer 39

This is a written order, prepared by the interior designer, directing the contractor to make a change before the owner and contractor have agreed on the amount of adjustments in cost, time, or both.

Question 40

What are six things the interior designer is NOT responsible for during contract administration?

Answer 40

During this phase of a project, the designer is NOT responsible for: - the means, methods, or techniques of construction - safety on the job site - fabrication, shipment, or installation of construction elements or furnishings - acts or omissions of contractors, subcontractors, or suppliers - stopping the work if there are problems - receipt, inspection, and acceptance of furniture or fixtures

Question 41

What are two common types of construction claims?

Answer 41

- claims for additional time | - claims for concealed or unknown conditions

Question 42

How is mediation different from arbitration?

Answer 42

With the former, a neutral third party facilitates an agreement between the disputing parties, but the agreement is not binding. With the latter, the third party hears arguments and renders and decision according to specified rules, and the decision is binding.

Question 43

What are the interior designer's obligations during construction observation?

Answer 43

The interior designer must: - become generally familiar with the progress and quality of the work - keep the owner informed about the progress of the work - endeavor to guard the owner against defects in the work - determine, in general, if the work is progressing in such a way that it is in accordance with the contract documents