CMGT 3500 Final Exam Questions And Answers

List several measures that describe the size of the construction industry - ANS - 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? - ANS periods of recession why is the construction industry referred to as an easy entry and easy exit industry? - ANS 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? - ANS 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? - ANS 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) - ANS 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 - ANS -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? - ANS 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? - ANS 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? - ANS 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? - ANS If the different parties cannot amicably resolve any dispute, a lawsuit will be filed and litigation will begin and a court decision will legally come up with an outcome. Give a construction example of a unilateral contract, and a bilateral or a mutual contract. - ANS unilateral: a one-sided contract in that only one of the contracting parties makes a promise, while the other party exchanges something other than a promise, (performance) bilateral: an agreement created by mutual promises made by the contracting parties. each party plays two roles: promisor and promisee. most construction projects are bilateral Give an example of an implied contract in which estoppel will prevent one party from canceling the contract - ANS a contract may be created by what a party does or says, without a written document, and that party is then "estopped" from denying that a contract exists. Discuss the significance of a bid being an offer rather than an acceptance - ANS offer: made when one person signifies to another person a willingness to enter into a binding contract on certain specified terms. once an offer is made, it is revocable as long as it has not been accepted acceptance creates the contract What is the relationship between eminent domain and condemnation? - ANS eminent domain is the right of the federal government or state to take possession of private property and appropriate it for public use. condemnation is the exercise of eminent domain Describe the major differences between a right-of-way and an easement - ANS right-of-way: a tract of land, usually consisting of a series of connected parcels of property, that is used for the operation of a highway or public utility. owned by public or private firms