Questions and Answers
Which of the following methods of compensation for CM services is inconsistent with the CM's agency relationship to its owner?
The fee as a percentage of construction cost method of compensating an agency CM has a tendency to discourage effective time and cost control and is in conflict with the objectives and benefits of an agency construction management.
True
In cases where a project is extended in duration for reasons beyond the control of the CM, it is imperative that the CM agreement address:
The cost reimbursement method of compensation is one of the most commonly used forms of CM compensation associated with agency CM.
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Once the Guaranteed Maximum Price is established, the owner does not have to be concerned with managing costs or schedules.
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Liquidated damages on a contract are included to compensate the owner for a delay in completing the work.
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The owner can transfer risk to the CM and maintain a full agency relationship with the CM.
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A method of compensation that creates a potential for conflict of interest between the owner's interests and the CM's interests is indicative of an agency CM relationship.
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An agency CM with a fixed fee compensation arrangement shares in the savings generated by a lower than planned construction cost of the project.
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Requiring a Guaranteed Maximum Price for the ultimate cost of the project does not create any potential for conflict between the CM and the owner's interests during the 'front end,' pre-construction phase services.
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The method of compensation of the CM is one of the elements that defines the nature of the relationship between the owner and the CM.
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Deficient contract documents are a common cause of disputes.
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The contract documents for a project should be written primarily to protect the interest of the CM.
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The owner, CM, and designer are less likely to be involved in disputes with the contractor if a contract is awarded to the lowest bidder.
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Owners should always use standard forms of agreement without modification for each project.
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As the number of prime contractors on a project increases, the need to carefully coordinate contract documents increases.
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The roles of the CM as specified by the AIA and CMAA standard forms of agreement are significantly different.
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In the CMAA CM-at-Risk series contract documents, the CM may perform part of the construction work if the CM so chooses.
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Under the CMAA CM-at-Risk contract documents, the owner may, without penalty, direct the CM to provide services as an agent of the owner.
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After the owner accepts a CM's proposed GMP as contemplated by the CMAA CM-at-Risk Series documents, the responsibilities and duties of the CM are essentially the same as if the owner and CM were using the AIA GMP documents.
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The CMAA standard forms of agreement (Agency or CM-at-Risk Series) are the best documents for an owner to use on all design and construction projects.
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A CM should seek the advice of legal counsel when preparing or modifying contracts.
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Standard form contracts (such as the CMAA and AIA documents) may be modified to address an owner's project-specific requirements.
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The CMAA contract documents were written primarily to protect the interests of the CM.
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The basic contractual relationships between the CM and designer are essentially the same in the CMAA A-1 and AIA C132-2009 documents.
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In the CMAA Agency series, the designer is entitled to object to provisions of the Construction Management Plan as prepared by the CM.
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According to the CMAA Agency series contract documents, the CM and designer are required to cooperate for the benefit of the owner.
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When providing services specified in CMAA document A-1, the CM may have a fiscal liability for negligent preparation of cost estimates.
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The designer, while working under CMAA document A-4, is entitled to rely upon the cost estimate data prepared by the CM.
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In the CMAA CM-at-Risk series documents, the CM is the owner's principal agent until a GMP is accepted by the owner.
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A CM's role and responsibilities are governed solely by the Owner/CM Agreement.
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Which of the following do not apply to both CM forms?
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Which of the following factors contributed to the initial use of construction management?
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The General Services Administration was the first federal agency to use construction management.
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Which of the following was/were common problems for the General Services Administration, the Department of Health, Education and Welfare, and the Veterans Administration?
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CMAA was formed and incorporated in 1982 with its primary focus being the growth and development of the construction management profession.
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The CMAA Construction Management Standards of Practice is intended as a guide to the range of services that constitute professional construction management.
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What are the goals of the Construction Management Association of America (CMAA)?
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The fact that an individual is certified or licensed in any other profession does not establish him/her as a qualified CM.
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Certification as a CM means the construction management practitioner has 'state of the art' knowledge and capability to practice construction management.
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Recruiting and training are business matters and normally do not involve ethical concerns.
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Construction management is a concept that is susceptible to overselling.
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Failure to provide quality services is a business and not an ethical question.
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Contracting for adequate fees is both a business and an ethical issue.
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The ethics of the CM profession focus primarily on a CM's relationships in dealing with its clients.
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A key reason for variations in project delivery approaches is:
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The traditional delivery system is characterized by executing the major phases of a project in:
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A key advantage of the traditional delivery approach is:
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Design-build and at-risk construction management delivery systems allow the option to fast-track or phase a project.
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Most definitions of construction management are similar. However, a contractual definition is not known until:
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In a CM-at-Risk arrangement once construction begins, the CM has no implied duties of loyalty and care to the owner.
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The agency CM does not perform design or actual construction work.
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Under the CM-at-Risk delivery method, the owner usually must deal with a hybrid of a construction manager and a general contractor.
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Under a CM-at-Risk contract, which of the following statements are true?
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In considering the differences between agency CM and CM-at-Risk, which one of the following statements is NOT true?
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The agency CM maintains a direct contractual relationship with the trade or prime contractors.
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Placing the CM in an agency role always transfers the risk to the contractor.
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In an agency CM relationship, the CM has no vested financial interest in the project.
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Under agency CM, agency is a relationship between owner and CM as agent acting in the owner's interest.
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Actual usage of a particular contract form for the construction phase depends on:
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There are two basic categories of construction phase contracts, cost reimbursement and fixed price.
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Under a fixed price or lump sum contract, the contractors can be asked to bid on work based on partially completed documents.
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The primary advantage of the fixed price or lump sum contract is that bids should be taken on contract documents that are only 50% complete.
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A general contractor working under a fixed price contract will always put its interests ahead of the owner.
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Under a cost plus fixed fee arrangement, the fixed fee is usually established at the time of contract award; however, it may vary with the actual cost expended.
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Under a Guaranteed Maximum Price arrangement, the contractor is usually selected and a GMP is established with the understanding by the parties that the actual cost of the work could be greater than the GMP.
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On some GMP projects, the owner may reserve the right to approve all trade and purchase contracts.
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Once a GMP for construction costs is established, the contractor takes on the risk of completing the project.
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A guaranteed maximum price can never change.
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Under a GMP contract, the intent of an incentive clause is to challenge the contractor to construct the project for less than the established GMP.
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Under a unit price-type contract, the total cost to the owner will vary with the actual units put in place.
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In cases where standard construction contract forms are proposed to be used, it is imperative that legal counsel be utilized to review the contract.
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Quality control begins:
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The contractor is solely responsible for safety on the job site.
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A key element leading to successful project management is decision making based on adequate information.
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Which statement most adequately describes the scheduling results desired on a project?
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A project schedule must always be in a CPM format.
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The CM does not have the responsibility to generate and track the project budget.
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The CM is responsible to ensure that the contracts used on the project are legally enforceable.
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The project record includes:
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The owner's selection of a project delivery system should be made before a decision by the owner to select a CM and designer.
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A/E services are required to be competitively bid under the 'Brooks Act.'
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CM services, like A/E services, can be accurately defined to provide a basis for a bid.
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A CM response/proposal to an owner's request for proposal can be considered an offer to enter into a contract.
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CMAA defines construction management as a professional management practice applied to construction projects from project inception to completion.
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What regulations define and differentiate public and private sector contracting?
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What is a principal differentiator between public and private sector contracting?
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In the selection of a CM as an agent, the owner should include price as a primary consideration.
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A CM, acting as an agent of the owner, will bond a multi-prime job.
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There is more than one type of legal relationship that may exist between an owner and the CM.
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The standard of care to which a CM is likely to be held is:
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The scope of the professional CM's basic and invariable role and responsibility is to serve the needs of the owner.
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During the CM selection process, which of the following statements is true?
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There are no accepted industry-wide standards or guidelines for determining what is considered to be reasonable and fair compensation for construction management services.
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With regard to CM compensation and the actual cost of CM services for a specific project, which of the following factors among others, should be considered?
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Under a fixed fee approach to agency CM compensation, which of the following statements is NOT true?
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The cost plus fixed fee method of CM compensation can be divided into two separate phases—pre-construction and construction.
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Under a cost plus fixed fee arrangement for CM compensation, the reimbursable expenses usually include:
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Study Notes
CM Roles and Responsibilities
- A Construction Manager's duties are dictated by the Owner/CM Agreement.
- Two primary forms of Construction Management (CM) exist: agency and at-risk, each defining specific roles and liabilities.
Historical Context
- Construction management originated in the 1960s, driven by the need to reduce project time, costs, and respond to changing contractor roles and funding unpredictability.
- The General Services Administration was the first federal agency to adopt construction management.
Common Challenges
- Agencies like the General Services Administration encountered similar issues with CM, including funding restrictions, claims, and changing conditions.
Certification and Ethics
- CMAA established in 1982, aimed to promote construction management professionalism.
- Certification does not automatically qualify an individual as a competent CM.
- Ethical considerations in CM include quality service delivery and adequate fee contracts.
Project Delivery Systems
- There are nearly limitless approaches to project delivery, influenced by participant roles, contracts, and risk levels.
- Traditional delivery systems follow a linear sequence; a key advantage is full specification of facility features before construction.
Contract Types and Regulations
- Two major categories of construction phase contracts include cost reimbursement and fixed price.
- Fixed price contracts may involve bids based on completed documents or partial designs.
- Costs under guaranteed maximum price (GMP) contracts shift some risks to the contractor.
Agency vs. At-Risk CM
- Agency CM acts purely in an advisory capacity, while CM-at-Risk combines advisory roles with general contractor responsibilities.
- Agency CM lacks a direct contractual relationship with subcontractors and does not perform physical work.
Compensation and Services
- Compensation methods for CMs include fixed fee, cost plus fixed fee, and percentage of construction cost, with each having distinct implications for project management.
- All contracts must be carefully reviewed for legal enforceability, compliance, and compatibility with broader project requirements.
Quality Assurance and Safety
- Quality control initiatives should commence at the planning stage.
- Safety on the job site is a shared responsibility, not solely the contractor's role.
Project Management Essentials
- Decision-making during project management should rely on comprehensive and accurate information.
- The CM must maintain and track project budgets and schedules, ensuring effective contract management.
Selection and Standards
- The owner's selection of CM should occur before finalizing the project delivery system.
- Clear understanding of scope, risks, and authority is vital during the CM selection process.
Legal Considerations
- Multiple legal relationships can exist between the owner and CM.
- The FAR (Federal Acquisition Regulations) establishes foundational guidelines that differentiate public and private sector contracting.
Miscellaneous
- Industry standards exist for assessing reasonable compensation for CM services.
- Liquidated damages in contracts serve to compensate owners for project delays.
Agency Relationships
- Owners cannot transfer risk to the Construction Manager (CM) while maintaining a full agency relationship.
- Under an agency relationship, CMs must prioritize their own risks when managing multiple prime contractors.
- Compensation methods can affect the agency relationship; specifically, certain methods may not align with the agency model.
Compensation Methods
- "Multiple of direct personnel expenses" is inconsistent with the CM's agency relationship to its owner.
- An agency CM with a fixed fee arrangement does not share in savings from lower construction costs.
- The Guaranteed Maximum Price (GMP) does present potential conflicts of interest during pre-construction phase services.
Contractual Elements
- The nature of the relationship between the owner and CM is defined, in part, by the compensation method.
- Deficient contract documents frequently lead to disputes.
- Contract documents should serve the owner's interest rather than favor the CM.
Dispute Avoidance
- Awarding contracts to the lowest bidder does not inherently reduce disputes among the owner, CM, and designer.
- Using standard agreements without modifications for every project is not advisable.
Coordination and Roles
- Increased numbers of prime contractors necessitate enhanced coordination of contract documents.
- The roles outlined in AIA and CMAA agreements showcase significant differences.
Legal and Document Guidance
- CMs are encouraged to consult legal counsel when preparing or modifying contracts.
- Standard form contracts can be tailored to meet specific project requirements.
Relationships and Responsibilities
- The CM's responsibilities under CMAA's CM-at-Risk series differ from those under AIA's GMP documents once a GMP is accepted.
- The CMAA standard forms are generally effective for all design and construction projects.
Cooperation and Liability
- The CM and designer must cooperate for the benefit of the owner according to CMAA’s agency series.
- CMs may incur fiscal liability for negligent cost estimate preparation under CMAA document A-1.
- Designers are entitled to rely on cost estimates prepared by the CM while following CMAA document A-4.
Principal Agency
- The CM acts as the owner's principal agent in CMAA CM-at-Risk series until the owner accepts a GMP.
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Test your knowledge on construction management with these flashcards for the CMIT exam. Covering essential responsibilities, forms of construction management, and key principles, these questions are designed to help you study effectively. Perfect for anyone preparing for the certification.
