TBLS - CONSTRUCTION LAW > Contracts > Flashcards

Contracts Flashcards

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1
Q

What is the Design-Bid-Build (DBB) process?

A

Owner hires architect → complete design → bid → GC builds.

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2
Q

What are the advantages of Design-Bid-Build (DBB)?

A
  • Clear roles
  • Lowest bid competition
  • Cost known upfront
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3
Q

What are the disadvantages of Design-Bid-Build (DBB)?

A
  • Longer timeline
  • Adversarial relationships
  • More change orders
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4
Q

What is the Design-Build (DB) process?

A

One entity provides both design & construction.

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5
Q

What are the advantages of Design-Build (DB)?

A
  • Faster (overlapping design/construction)
  • Collaboration
  • Fewer disputes
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6
Q

What are the disadvantages of Design-Build (DB)?

A
  • Owner has less control of design
  • Risk of conflicts of interest
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7
Q

What is the Construction Manager at Risk (CMAR / CM@R) process?

A

CM engaged early for pre-construction services, later acts as GC with GMP.

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8
Q

What are the advantages of Construction Manager at Risk (CMAR)?

A
  • Early contractor input
  • Ability to fast-track
  • GMP risk allocation
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9
Q

What are the disadvantages of Construction Manager at Risk (CMAR)?

A
  • Potential adversarial shift after GMP set
  • Depends heavily on CMAR’s skill
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10
Q

What is the structure of Cost-Plus Contracts?

A

Owner pays actual costs + contractor’s fee; sometimes with GMP.

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11
Q

What are the advantages of Cost-Plus Contracts?

A
  • Flexibility
  • Transparent accounting
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12
Q

What are the disadvantages of Cost-Plus Contracts?

A
  • Less price certainty
  • Requires oversight
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13
Q

What is Multi-Prime Contracting?

A

Owner holds separate contracts with trade contractors.

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14
Q

What is Integrated Project Delivery (IPD)?

A

Multi-party agreement (Owner–Architect–Contractor) with shared risk/reward.

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15
Q

What are Public-Private Partnerships (P3/PPP)?

A

Private sector finances & builds; more common in infrastructure.

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16
Q

What does the Texas Anti-Indemnity Act govern?

A

Voids certain indemnification clauses in construction contracts.

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17
Q

True or False: The Texas Anti-Indemnity Act allows indemnity for another party’s own negligence.

A

False

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18
Q

What is a Consequential Damages Waiver?

A

Common in AIA A201.

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19
Q

What are typical insurance requirements in construction contracts?

A
  • CGL
  • Builder’s Risk
  • Workers’ Comp
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20
Q

What does Alternative Dispute Resolution (ADR) typically mandate?

A

Mediation → arbitration (AAA rules).

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21
Q

What is the significance of CPRC Ch. 272?

A

Texas law & venue required for certain Texas construction contracts.

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22
Q

What does CPRC Ch. 130 limit?

A

Indemnity & additional insured provisions.

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23
Q

What is the purpose of Gov’t Code Chapter 2269?

Study These Flashcards
A

Authorizes governmental entities to use alternative delivery methods for construction projects.

24
Q

What are the allowed delivery methods under Gov’t Code Chapter 2269?

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A
  • Competitive Bidding
  • Competitive Sealed Proposals
  • Construction Manager–Agent
  • Construction Manager-at-Risk
  • Design-Build
  • Job Order Contracts
25
What is the rule for professional services under Gov’t Code Chapter 2254?
No competitive bidding; must use qualifications-based selection.
26
What must contractors pay workers according to Gov’t Code Chapter 2258?
Prevailing wage rates.
27
What is the exclusive process for resolving contract disputes with Texas state agencies?
File claim with agency’s contract claims officer, administrative hearing before SOAH.
28
What is a Lump Sum (Fixed Price) Contract?
Contractor agrees to complete the work for a single, fixed price.
29
What are the advantages of a Lump Sum Contract?
* Cost certainty for the owner * Simple structure
30
What are the disadvantages of a Lump Sum Contract?
* Less flexible * Disputes common over 'extra work' vs. base scope
31
What is a Unit Price Contract?
Price based on actual quantities installed × agreed unit rates.
32
What are the advantages of a Unit Price Contract?
* Flexible if quantities unknown * Owner pays only for work performed
33
What are the disadvantages of a Unit Price Contract?
* Total price uncertain * Disputes over measurement and classification
34
What is the definition of Cost-Plus Contracts?
Contractor reimbursed for actual costs plus a fee.
35
What are the variants of Cost-Plus Contracts?
* Cost + Fixed Fee (CPFF) * Cost + Percentage of Cost (CPPF) * Cost + Fee with GMP
36
What is a Guaranteed Maximum Price (GMP) Contract?
Contractor reimbursed for actual costs plus fee, capped at a maximum price.
37
What are the advantages of a Guaranteed Maximum Price (GMP) Contract?
* Protects owner from runaway costs * Often includes shared savings incentive
38
What are the disadvantages of a Guaranteed Maximum Price (GMP) Contract?
* Contractor may inflate GMP * Disputes over reimbursable costs
39
What is the risk allocation in Design-Bid-Build (DBB)?
* Owner: risk of design errors * Contractor: risk of construction means/methods
40
What is the risk allocation in Design-Build (DB)?
* Owner: reduced coordination burden * Contractor/DB entity: assumes design + construction risk
41
What are the advantages of Construction Manager at Risk (CMAR)?
* Early collaboration on design/budget * Combines flexibility of cost-plus with cost certainty of GMP
42
What is the risk allocation in Integrated Project Delivery (IPD)?
All parties share cost/schedule risks and rewards.
43
What are the advantages of Public-Private Partnerships (P3 / PPP)?
* Brings private financing/expertise * Can accelerate delivery of public projects
44
What is the definition of Public-Private Partnerships (P3 / PPP)?
Private entity finances, builds, and/or operates public infrastructure. ## Footnote P3s are collaborative agreements between public and private sectors to deliver public infrastructure projects.
45
What are the advantages of Public-Private Partnerships?
* Brings private financing/expertise * Can accelerate delivery of public projects ## Footnote These advantages often lead to improved project efficiency and innovation.
46
What are the disadvantages of Public-Private Partnerships?
* Complex financing/structuring * Political/public risk ## Footnote These challenges can complicate project execution and stakeholder engagement.
47
What Texas statute governs Public-Private Partnerships?
Gov’t Code Ch. 2267 (Texas P3 statute). ## Footnote This statute outlines the legal framework for P3s in Texas.
48
What is a Guaranteed Maximum Price (GMP)?
The contractor guarantees that costs will not exceed a set limit. ## Footnote This pricing structure provides financial predictability for project owners.
49
What are the three main structures of GMP?
* Cost-reimbursable * Guaranteed maximum price * Savings clause ## Footnote Each structure has unique implications for cost management and contractor incentives.
50
How does risk allocation work under a GMP contract?
Contractor bears risk: If costs exceed the GMP, contractor absorbs the loss. ## Footnote This arrangement incentivizes contractors to manage costs effectively.
51
What are the advantages of using a GMP structure?
* Encourages collaboration in preconstruction * Limits owner’s financial exposure * Potential cost savings are incentivized ## Footnote These benefits enhance project delivery and stakeholder satisfaction.
52
What are the disadvantages of using a GMP structure?
* Requires detailed cost tracking and auditing * Disputes may arise over reimbursable costs * Contractors may inflate the GMP ## Footnote These challenges can complicate contract administration and financial oversight.
53
What legal considerations should be reviewed in Texas regarding GMP?
* Change order procedures * Allowable vs. unallowable costs * Contingency fund handling * Allocation of savings * Time extensions for delays ## Footnote Understanding these provisions is essential for compliance and effective contract management.
54
What industry forms are commonly used for GMP contracts?
AIA (A102 – Cost of the Work plus Fee with GMP). ## Footnote These forms provide standard language and provisions for GMP agreements.
55
True or False: GMP contracts fall under private contract law principles only.
False. ## Footnote GMP contracts can also be applied in public projects where procurement statutes permit.
56
Fill in the blank: A _______ guarantees that costs will not exceed a set limit in construction contracts.
[key learning term] Guaranteed Maximum Price (GMP).
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