DBIA EXAM #3 TEST QUESTIONS WITH ACCURATE ANSWERS BEST STUDYING MATERIAL NEW VERSION, Exams of Business Systems

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DBIA EXAM #3 TEST QUESTIONS WITH

ACCURATE ANSWERS BEST STUDYING

MATERIAL NEW VERSION UPDATE

2024 - 2025.

What are the 5 requirements for a valid contract?

• ANSWER 1. Offer

2. Acceptance
3. Consideration
4. Capacity
5. Authority Offers must demonstrate an expression of _____ to contract on certain terms. - ANSWER willingness The response to an RFP is an example of a(n) _____.

• ANSWER Offer What 2 things can nullify an offer? - ANSWER 1. Varying/additional terms

2. Counteroffers Oral contracts can be valid. True or False?

• ANSWER True Oral contracts can be valid on what 2 requirements? - ANSWER 1. Material terms of contract are clearly established.

2. Parties demonstrate intention to be bound by those material terms _____ ______ contracting rule makes it very difficult to create an Oral contract. - ANSWER Public Sector _____ _____ _____ mandates that certain types of contracts be written.

• ANSWER Statute of Frauds What is an example of a contract that the Statute of Frauds mandates to be written? - ANSWER contracts that are impossible to complete within one year "Where a contract does not fix a definite price, there must be a definite method for _____ it."

• ANSWER ascertaining What case is this?
• NAVFAC project.
• Party's $5.2 million price used by other party in bid, but the project is awarded to other.
• Statute of Frauds found applicable.
• ANSWER Trident V. Austin (2003) Contracts created by conduct that is contrary to public sector are _____. enforceable or unenforceable?
• ANSWER unenforceable What are 2 examples of an unenforceable contract that is contrary to public policy? - ANSWER - Duress
• Misrepresentation and Fraud Which of the following terms may be found contrary to public policy? a.) Indemnity b.) Limitations of Liability c.) Advanced waivers of lien rights. d.) No damages for delay. e.) All of the above.
• ANSWER e.) All of the above. _____ _____: Means of protecting a party who is reliant on someone's actions. - ANSWER Promissory Estoppel What are 2 common examples of Promissory Estoppel?
• ANSWER 1. Subcontractor bids

2. Teaming relationships What case is this?

• Party sues for lost profits ($3-4 million)
• 5th Circuit found material facts in dispute that allowed party to maintain a promissory estoppel theory.
• ANSWER Metroplexcore V. Parsons Transportation Group (2014) _____ Damages: Award what was reasonably expected from the contract . - ANSWER Expectation _____ _____: When expectation damages not available, award what party would have had if contract had not existed.

• ANSWER Rescission Damages _____ ______ & _____ _____: If contract's subject is unique, a court may order that the breaching party perform its obligations under that contract (specific performance) or stop doing something (injunction).
  • ANSWER Specific Performance & Injunctive Relief _____ _____: Award of a reasonable sum of money (i.e., "what the claimant deserved")
• ANSWER Quantum Meruit Damages cannot be speculative, and must be proven to a _____ degree of certainty. - ANSWER reasonable The contract may NOT impose limitations on what can be claimed. True or False?
  • ANSWER False
• Liquidated damages.
• Limitations of liability.
• Improper default terminations.
• No damages for delay.
• Waivers of consequential damages. These are all examples of Contractual _____.
  • ANSWER Limitations ______ Damages: Arise from the consequences of a breach.
  • ANSWER Consequential _____ Damages create substantial financial exposure if something goes wrong. - ANSWER Consequential Consequential Damages demonstrates the importance of Contractual ______. - ANSWER Waivers Consequential Damages are distinct from "_____" Damages.
• ANSWER Direct Direct Damages or Consequential Damages? "Lost Profit on the project"
• ANSWER Direct Damages Direct Damages or Consequential Damages?

"Cost or repair the damage to the project."

• ANSWER Direct Damages Direct Damages or Consequential Damages? "Rental of temporary generator to meet power needs on project"
• ANSWER Direct Damages Direct Damages or Consequential Damages? "Lost profits on other projects"
• ANSWER Consequential Damages Direct Damages or Consequential Damages? "Loss of rental income from tenants. " - ANSWER Consequential Damages Direct Damages or Consequential Damages? "Damages to customers."
• ANSWER Consequential Damages Direct Damages or Consequential Damages? "Rental of temporary generator to provide power for the Owner to meet its customer's needs."
• ANSWER Consequential Damages _____ Application: Owner needs to pay once for items negligently omitted.
• ANSWER Practical Limitations of liability can impact recovery. True or False?
• ANSWER True Even if professional negligence is proven, damages recoverable are impacted by the _____ _____.
• ANSWER Betterment Theory Ordinary _____ _____ _____: Exercise of that skill and judgement which can reasonably be expected from similarly situated professionals . - ANSWER Standard of Care Expert testimony is needed to prove the Standard of Care "_____"

• ANSWER baseline What are 2 examples of privity of contract needed to sue a party for economic losses? - ANSWER 1. delay damages

2. Cost to correct defects Application is determined on a state-by-state basis (not valid in all states) True or False?

• ANSWER True The Economic Loss Doctrine is applicable to personal injury. True or False.
• ANSWER False The _____ has a professional standard of care.
• ANSWER Designer The _____ has the duty to build what is in the plans and specs.
• ANSWER Builder The _____ assumes risk of non-negligent design defects when it has separate contracts with the builder and designer. – ANSWER Owner _____ _____: Provides the following implied warranties-- Plans and specs furnished are accurate and are suitable for intended purpose.
• ANSWER Spearin Doctrine The Spearin Doctrine is judicially recognized at both state and federal level. True or False?
• ANSWER True What case is this?
• State argued that Spearin did not apply to CMAR Contract.
• Appellate court found that Spearin did apply to CMAR . - ANSWER Coughlin Electrical Contractors V. Gilbane (2015) ______ _____: Owner causes performance of work beyond scope of contract but does not recognize contractor's entitlement to a change order.
• ANSWER Constructive Changes

Owner causes performance of work beyond _____ _____ _____ but does not recognize contractor's entitlement to a change order.

• ANSWER Scope of Contract Which Constructive Changes Step is this? "Contractor has time or cost impact for something it did not anticipate."
• ANSWER Step 1 Which Constructive Changes Step is this? "Files request for change order. " - ANSWER Step 2 Which Constructive Changes Step is this? "Request is denied by owner." - ANSWER Step 3 Which Constructive Changes Step is this? "Contractor follows process in Changes Clause to submit its claim for relief." - ANSWER Step 4
• defective specifications (Spearin).
• Disputes over contract interpretation.
• Superior knowledge.
• Breach of implied duties of good faith, fair dealing, and cooperation.
• Constructive acceleration. These are all types of _____ ______ - ANSWER Constructive Changes Resolution in disputes over contract interpretation typically involves looking at the requirement through the eyes of a(n) _____ _____. - ANSWER reasonable bidder. Technical requirements are written perfectly and can be subject to different meanings to different people. True or False? - ANSWER False "never written perfectly" _____ _____ _____: what the parties do during the performance of this contract. a.) Course of Performance b.) Course of Conduct c.) Terms of Art - ANSWER a.) Course of Performance

_____ _____ _____: what the parties do during the performance of other similar contracts. a.) Course of Performance b.) Course of Conduct c.) Terms of Art - ANSWER b.) Course of Conduct _____ _____ _____: the use of a word in a specific industry. a.) Course of Performance b.) Course of Conduct c.) Terms of Art - ANSWER c.) Terms of Art

• Failing to manage multiple prime contractors.
• Overzealous inspections.
• Using undue leverage in a negotiation position. These are examples of breaches of _____ _____. - ANSWER Implied Duties _____ _____ risk is one of the major risks on projects. - ANSWER Site Condition Full knowledge of all site conditions is never known. True or False? - ANSWER True Owners generally bear this risk of unforeseen site conditions through a(n) _____ ______ _____ clause. - ANSWER Differing Site Conditions _____ _____ _____: Subsurface or physical conditions at the site that differ materially from those indicated in the CD - ANSWER Differing Site Conditions _____ _____ _____: Unknown physical conditions at the site, of an unusual nature that differ materially from those ordinarily encountered and generally recognized as inhering in the work of the character provided for in the contract. - ANSWER Differing Site Conditions _____ clauses frequently get in the way of efficient implementation of the DSC remedy.
• ANSWER Exculpatory Element of Constructive Acceleration: Contractor is entitled to a(n) _____ delay. - ANSWER excusable

Element of Constructive Acceleration: Contractor gives Owner _____ _____ of the delay and a proper request for a time extension. - ANSWER timely notice Element of Constructive Acceleration: Time extension _____ or _____. - ANSWER - postponed

• refused Element of Constructive Acceleration: Order by _____ that the project be completed within its original performance period. - ANSWER Owner Element of Constructive Acceleration: _____ actually accelerates its performance, thereby incurring excess costs. - ANSWER Contractor _____ clauses often used to deal with the liability ramifications. - ANSWER Indemnity Issue with _____ _____ and partnerships: Claimant can pursue each party for _____% of the liability for acts of the joint venture, regardless of which party created the problem.
• ANSWER - Joint Venture
• 100% Issue with Joint Venture: Responsibility of _____ to sort out the respective proportions of liability. - ANSWER defendants In DB, the _____ is removed from the design and construction interface. - ANSWER Owner In DB, the _____ and _____ are in a direct contractual relationship. - ANSWER - Contractor
• Designer Which case is this?
• $48 million DB housing project at Marine Corps base.
• Differing site condition claims.

• Breach of good faith and fair dealing. - ANSWER Metcalf Construction V. USA (2014) Owners should perform appropriate _____-_____ tasks. - ANSWER front-end _____ Specification: Owner dictates exactly how an element is to be designed and constructed. - ANSWER Prescriptive _____ Specification: Owner only provides the requirement(s) for the end result of an element that will be designed by others. - ANSWER Performance If the design-builder is expected to meet performance guarantees, the contract should clearly identify _____, and the guarantees should be capable of being _____ and reasonably _____ by a design-builder performing its work in a commercially reasonable fashion. - ANSWER - guarantees
• measured
• achievable What are 3 remedies if the Design-Builder fails to meet performance requirements? - ANSWER 1. Actual Damages

2. Liquidated Damages
3. "Make good" Commercial impracticability is accepted by all courts as a defense. True or False? - ANSWER False "rejected by some courts" The contract should clearly define the role of the _____ _____ _____ and how it/they will communicate with the Owner. - ANSWER Designer(s)-of-Record The contract should ensure that there is a clear understanding as to how the _____ _____ will communicate with each other and the Owner, including meetings that each party is expected to attend. - ANSWER Team members _____ _____ are agreements that address business pursuits. - ANSWER Teaming Agreements Best practices mandate that teaming agreements must be used. True or False? - ANSWER True During the proposal phase, the design-builder should use written _____ _____ with each team member to develop and capture an understanding of their relationship and key commercial aspects of their relationship. - ANSWER teaming agreements

The design-builder and its designer(s) should develop a(n) _____, at the outset of their relationship, of the key _____ aspects of their relationship. - ANSWER - understanding

• commercial DBIA Document _____: Standard form of Teaming Agreement between Design-builder and Teaming Party. - ANSWER 580 _____-_____: Prime contracting party with Owner. - ANSWER Design-Builder _____ _____: Any party entering into a lower tier or subcontracting agreement with Design- Builder. - ANSWER Teaming Party _____ Agreement: The subcontractor that the parties will enter into if Design-Builder wins the procurement. - ANSWER Subsequent ______ for Teaming Agreement: every party must ensure that they have the requisite qualifications and personnel to perform the Work. - ANSWER Qualifications _____ for Teaming Agreement: parties must have the insurance required for the Subsequent Agreement in place. - ANSWER Insurance _____ _____ _____: defines who is responsible for what portion of the deliverables for the RFQ/RFP. - ANSWER Matrix of Responsibilities Compensation for subsequent agreements can be any form of compensation including fixed sum, cost plus, hourly rates, etc. True or False? - ANSWER True What case is this?
• Failure of sign structures to meet contract requirements.
• deals with teaming agreement problem. - ANSWER URS Corporation V. Transpo (2015) The key concern with proprietary meetings is how to run the meetings ensuring _____. - ANSWER fairness _____ Meetings are recognized as a way for both parties to benefit from the DB process. - ANSWER Proprietary _____ _____ _____: Modifies a mandatory RFP requirement. - ANSWER Alternative Technical Concepts

Agencies have great discretion in running their _____. - ANSWER procurements If there is nothing that confers rights on the Owner to use the work product, the Owner's use can be a(n) _____ violation. - ANSWER copyright Contracts used on DB projects should be _____, balanced and clear and should promote the _____ aspects inherent in the DB Process. - ANSWER - fair

• collaborative Contracting parties should proactively and cooperatively identify significant project- specific _____ and clearly identify in the contract how such _____ will be handled. - ANSWER - risks
• risks Contracts should reasonably allocate _____ to the party that is best capable of addressing and mitigating the _____. - ANSWER - risks
• risk contractors want benefits of balanced contacts _____, but use of the "hammer" to shift substantial risk _____. - ANSWER - upstream
• downstream Designers are by their nature _____ averse. - ANSWER risk Contracts should use language that is _____ to those personnel who are administering the project. - ANSWER understandable _____ _____ contracts satisfy many of the goals behind DB best practices. - ANSWER Standard Form What are the 4 current US Standard Form DB Contracts? - ANSWER 1. DBIA

2. Consensus Docs
3. AIA
4. EJCDC A contract's structure is based on how the contractor is _____. - ANSWER paid A contract's structure is based on how the _____ is paid. - ANSWER Contractor Lump Sum or Cost Plus/GMP?

• single price regardless of actual cost - ANSWER Lump Sum Lump Sum or Cost Plus/GMP?

• no meaningful opportunity for Owner to be involved in subcontractor procurement. - ANSWER Lump Sum Lump Sum or Cost Plus/GMP?
• no transparency into price - ANSWER Lump Sum Lump Sum or Cost Plus/GMP?
• limited audit rights and undisclosed contingencies. - ANSWER Lump Sum Lump Sum or Cost Plus/GMP?
• Owner has broad audit rights - ANSWER Cost Plus/GMP Lump Sum or Cost Plus/GMP?
• Owner has ability to be more involved in subcontractor procurement. - ANSWER Cost Plus/GMP Lump Sum or Cost Plus/GMP?
• Most contingencies are transparent - ANSWER Cost Plus/GMP Lump Sum or Cost Plus/GMP?
• Savings needs to be addressed. - ANSWER Cost Plus/GMP Lump Sum or Cost Plus/GMP?
• Administratively more complex - ANSWER Cost Plus/GMP
• Timing
• Assumptions (particularly schedule)
• Contingency
• Savings
• Line item guarantees These are all issues for which contract? - ANSWER GMP Which contract is most often used in Progressive DB? - ANSWER GMP In the PDB Process, The Design-Builder collaborates with the Owner during Phase ___ to create or confirm project's basis of design. - ANSWER Phase 1

In the PBD Process, Phase 2 is initiated up acceptance of the _____ _____. - ANSWER commercial proposal The "Appropriate" level of definition for Phase 2 in PDB is often ___% - ___% design completion. - ANSWER 40% - 60% What are the 2 contract approaches in PDB? - ANSWER 1. Single contract approach

2. Two-contract approach Deciding what happens if the relationship ends and the "off-ramp" is exercised is the most important issue in _____ contracts. - ANSWER PDB What case is this?

• Design-Builder terminated for default when it could not obtain a bond.
• Owner claims rebid and delay cost.
• Used PDB two-contract approach. - ANSWER Wallkill Medical V. Sweet Constructors (2008) _____ _____ _____ Documents set forth the documents that, if changed, would allow for a change order. - ANSWER Basis of Design Injunction and Infringement action are two remedies for _____ _____ rights. - ANSWER Intellectual Property What case is this?
• Owner terminates Architect
• New Architect uses original work product
• Owner and follow-on architect liable for copyright infringement. - ANSWER Johnson V. Jones (1996) Work Product is property of the _____ _____. - ANSWER Design-Builder Contracts should contain a _____ process that facilitates and expedites the review and resolution of potential changes to the contract and adjustments in the contract price and time. - ANSWER fair DB process does not preclude changes True or False? - ANSWER True

an Implementing technique for Execution recommends the Design-Builder and its team to establish and maintain a _____ system. - ANSWER trend Disincentives are enforceable only if they meet _____ damage prerequisites. - ANSWER Liquidated Legal sufficiency for Liquidated Damages: must be a reasonable measure of damages in light of circumstances after the time of the contracting True or False? - ANSWER False AT the time of the contracting ______: The act of accepting claims on behalf of another entity. - ANSWER Indemnification The contract should reflect that Designer-of-Record is regularly and actively involved throughout the project's _____. - ANSWER execution What are the 2 methods in which trade subcontractors be procured? - ANSWER 1. Best Value

2. Low Bid Who obtains professional liability insurance? - ANSWER A/E _____ Liability Insurance is also known as Errors and Omissions Insurance. - ANSWER Professional Builder's Risk Insurance can be obtained by which two parties? - ANSWER Owner or Design-Builder _____ _____ Insurance: First-party coverage against physical damage to project during construction. - ANSWER Builder's Risk _____ _____ Insurance: Risk of liability to Owner from employee injuries caused by occupational diseases. - ANSWER Employer's Liability _____ _____ Insurance: Risk of liability to third parties for BI/PD caused by vehicle accidents in connection with the project. - ANSWER Auto Liability _____ _____ Insurance: Risk of liability due to injuries to workers. Each state has different statutes. - ANSWER Worker's Compensation DBIA forms contain an exclusion for design services.

True or false? - ANSWER False DO NOT _____ _____ are Payment and performance bonds requires for public works contracts - ANSWER Surety Bonds _____ bond is for benefit of Owner if Contractor defaults. - ANSWER Performance _____ bond is for benefit of subcontractors and suppliers - ANSWER Payment What 3 categories are the Best Practices organized into? - ANSWER 1. Procurement

2. Contracting
3. Execution If these Best Practices are NOT implemented, there is an increased _____ that the project's performance will be _____ and that some or all of the stakeholders will be _____. - ANSWER - probability

• compromised
• disappointed. _____ and _____ contracts are fundamental to any delivery process. - ANSWER - Fair
• Clear Contracting principles apply to contracts of those working within the _____ _____ - ANSWER DB Team This chapter has ___ Best Practices and ___ Implementing Techniques. - ANSWER - 3
• 18 Contracts used on DB projects should be _____, _____, and _____ and should promote the _____ aspects inherent in the DB process. - ANSWER - fair
• balanced
• clear
• collaborative The contract between the _____ and the ______ _____ should address the _____ aspects of the DB process, including expected standards of care for design services. - ANSWER - Owner
• Design-Builder
• unique The contracts between the _____ _____ and _____ _____ should address the _____ aspects of the DB process. - ANSWER - Design-Builder
• Team Members

• unique Design-Build Done Right is the _____ of every DBIA certification course! - ANSWER core What are the 4 types of law? - ANSWER 1. Contract Law

2. Tort Law
3. Statutes and regulations
4. Common Law _____ Law is based on the use of precedent. - ANSWER Common Arbitration and mediation results don't provide direct _____. - ANSWER precedent _____: a party offers to contract with one another. - ANSWER Offer _____: a party accepts the other party's offer. - ANSWER Acceptance _____: value exchanged for performance. - ANSWER Consideration _____: the party making the contract must be legally able to do so - ANSWER Capacity _____: the individual forming the contract must have authority to do so - ANSWER Authority