CONSTRUCTION CONTRACTS REVIEW
EXAM QUESTIONS AND ANSWERS 100%
PASS 2026/2027
List several measures that describe the size of the construction industry - ANS - Accounts for
nearly 2/3 of $1 trillion in expenditures per year
- 5% of GDP
- 6% of industrial workforce
- largest single production activity in the American economy
What construction-related measures can be used to describe the strength of the U.S. economy?
- ANS - housing starts
- expenditures for new construction are highest when the economy is strong
- weak economy expenditures will be devoted to renovation and remodeling
Under what conditions might the funding of public construction projects be particularly high? -
ANS In periods of recession, the government is trying to stimulate the economy
Why is the construction industry referred to as an easy entry and easy exit industry? - ANS -
high growth rate
- low capital requirements
- little absolute cost or profit advantage for established firms
- most states have no rigid licensing requirements or fees
@2026 ALLRIGHTS RESERVED 1
, - a company company can be formed just to construct a single project
- firms are seldom sold as a unit
What are the ramifications of the cyclic tendencies experienced in the construction industry? -
ANS - limited employment opportunities during certain time periods
- unemployment rates are frequently double the rates of other industrial workers
Contrast the financing of public versus private construction projects. - ANS Private
- expenditure of existing capital
- direct loans from outside creditors
- sale of fixed assets
- issuance of additional shares of stock
- issuance of corporate bonds
- endowments
Public
- appropriations from annual operating budgets
- special taxation assessments for specific purposes
- bond issues for specific purposes
- endowments
Give examples of publicly financed building construction projects. - ANS - schools, hospitals,
fire stations, courthouses
Give examples of publicly financed non-building construction projects. - ANS roadways,
damns, airports, canals
@2026 ALLRIGHTS RESERVED 2
EXAM QUESTIONS AND ANSWERS 100%
PASS 2026/2027
List several measures that describe the size of the construction industry - ANS - Accounts for
nearly 2/3 of $1 trillion in expenditures per year
- 5% of GDP
- 6% of industrial workforce
- largest single production activity in the American economy
What construction-related measures can be used to describe the strength of the U.S. economy?
- ANS - housing starts
- expenditures for new construction are highest when the economy is strong
- weak economy expenditures will be devoted to renovation and remodeling
Under what conditions might the funding of public construction projects be particularly high? -
ANS In periods of recession, the government is trying to stimulate the economy
Why is the construction industry referred to as an easy entry and easy exit industry? - ANS -
high growth rate
- low capital requirements
- little absolute cost or profit advantage for established firms
- most states have no rigid licensing requirements or fees
@2026 ALLRIGHTS RESERVED 1
, - a company company can be formed just to construct a single project
- firms are seldom sold as a unit
What are the ramifications of the cyclic tendencies experienced in the construction industry? -
ANS - limited employment opportunities during certain time periods
- unemployment rates are frequently double the rates of other industrial workers
Contrast the financing of public versus private construction projects. - ANS Private
- expenditure of existing capital
- direct loans from outside creditors
- sale of fixed assets
- issuance of additional shares of stock
- issuance of corporate bonds
- endowments
Public
- appropriations from annual operating budgets
- special taxation assessments for specific purposes
- bond issues for specific purposes
- endowments
Give examples of publicly financed building construction projects. - ANS - schools, hospitals,
fire stations, courthouses
Give examples of publicly financed non-building construction projects. - ANS roadways,
damns, airports, canals
@2026 ALLRIGHTS RESERVED 2
