CMGT 3500 FINAL QUESTIONS AND
ANSWERS PT.1 END OF CHAPTER
List several measures that describe the size of the construction industry -
ANSWER-- accounts for 2/3 of $1-trillion in expenditures per year in new
construction
- constitutes about 5% of GDP
-6% (7.5 mill) of workers of the industrial workforce is employed directly in the
construction industry
-the construction industry represents the largest single production activity in the
American economy
Under what conditions might the funding of public construction projects be
particularly high? - ANSWER-periods of recession
why is the construction industry referred to as an easy entry and easy exit industry? -
ANSWER-high growth rate in construction
low capital requirements
little absolute cots or profit advantage for established firms
most states have no rigid licensing requirements or fees
What are the ramifications of the cyclic tendencies experienced in the construction
industry? - ANSWER-some firms exit the industry without the benefit of choice, they
fail.
periods of recession, weak local economy , competition increases, causing profit
margins to decrease which results in failure of construction companies
Contrast the financing of public versus private construction projects? - ANSWER-
private:
funded through:
-expenditure of existing capital
-direct loans from outside creditors
-sale of fixed assets
-issuance of additional shares of stock/corporate bonds
-endowments
public:
, funded through:
-appropriations from annual operating budgets (general taxation)
-special taxation assessments for specific purposes
-bond issues for specific purposes
-endowments
What are some advantages and disadvantages of the general contract approach?
(design-bid-build) - ANSWER-Advantages:
-gives the owner a firm idea of the final costs of the project
-GC has skills that should reduce cost to owner
-GC maintains a staff of trained supervisors
-clearly defined roles for each contracting party
disadvantages:
-often extends project duration
-owner does not have an agent involved in contractual arrangements
-leads to tight bids and small profit margins
-exposes owner a greater probability to claims
Discuss the criticisms that have been made of public agencies performing
construction services by the self-performance or force account method - ANSWER--
instances in which the public owner submitted a bid on competitively bid projects,
owner is frequently the low bidder
-other cases; owner does not permit private contractors to submit bids- the
contractors state they're placed at an unfair disadvantage
-say that owners do not charge properly for the costs of owning and operating heavy
equipment
What type of project might be ideally suited for the design-build or design-construct
method? - ANSWER-popular in constructing large, industrial type projects
no extensive design on which to compute a bid
it is possible to begin construction before completion of the design for the project
What are the advantages of using the professional construction management
approach? - ANSWER-to the owners benefit
CM gives the owner a GMP that the project cost will not exceed
permits flexibility for changing the project as the design evolves
fast-tracking projects are good for this approach
Which types of contractual arrangements lend themselves to fast-tracking? -
ANSWER-projects to be delivered quickly
what general rule is followed when one party to a contract wants to cancel the
contract, even though the second party has already performed a portion of or all the
obligations under the contract? - ANSWER-
ANSWERS PT.1 END OF CHAPTER
List several measures that describe the size of the construction industry -
ANSWER-- accounts for 2/3 of $1-trillion in expenditures per year in new
construction
- constitutes about 5% of GDP
-6% (7.5 mill) of workers of the industrial workforce is employed directly in the
construction industry
-the construction industry represents the largest single production activity in the
American economy
Under what conditions might the funding of public construction projects be
particularly high? - ANSWER-periods of recession
why is the construction industry referred to as an easy entry and easy exit industry? -
ANSWER-high growth rate in construction
low capital requirements
little absolute cots or profit advantage for established firms
most states have no rigid licensing requirements or fees
What are the ramifications of the cyclic tendencies experienced in the construction
industry? - ANSWER-some firms exit the industry without the benefit of choice, they
fail.
periods of recession, weak local economy , competition increases, causing profit
margins to decrease which results in failure of construction companies
Contrast the financing of public versus private construction projects? - ANSWER-
private:
funded through:
-expenditure of existing capital
-direct loans from outside creditors
-sale of fixed assets
-issuance of additional shares of stock/corporate bonds
-endowments
public:
, funded through:
-appropriations from annual operating budgets (general taxation)
-special taxation assessments for specific purposes
-bond issues for specific purposes
-endowments
What are some advantages and disadvantages of the general contract approach?
(design-bid-build) - ANSWER-Advantages:
-gives the owner a firm idea of the final costs of the project
-GC has skills that should reduce cost to owner
-GC maintains a staff of trained supervisors
-clearly defined roles for each contracting party
disadvantages:
-often extends project duration
-owner does not have an agent involved in contractual arrangements
-leads to tight bids and small profit margins
-exposes owner a greater probability to claims
Discuss the criticisms that have been made of public agencies performing
construction services by the self-performance or force account method - ANSWER--
instances in which the public owner submitted a bid on competitively bid projects,
owner is frequently the low bidder
-other cases; owner does not permit private contractors to submit bids- the
contractors state they're placed at an unfair disadvantage
-say that owners do not charge properly for the costs of owning and operating heavy
equipment
What type of project might be ideally suited for the design-build or design-construct
method? - ANSWER-popular in constructing large, industrial type projects
no extensive design on which to compute a bid
it is possible to begin construction before completion of the design for the project
What are the advantages of using the professional construction management
approach? - ANSWER-to the owners benefit
CM gives the owner a GMP that the project cost will not exceed
permits flexibility for changing the project as the design evolves
fast-tracking projects are good for this approach
Which types of contractual arrangements lend themselves to fast-tracking? -
ANSWER-projects to be delivered quickly
what general rule is followed when one party to a contract wants to cancel the
contract, even though the second party has already performed a portion of or all the
obligations under the contract? - ANSWER-
