Construction Exam Flashcards

Flashcards for construction exam review.

Indemnify

To reimburse another for a loss suffered because of a third party's or one's own act or default.

Patent Defect

An obvious flaw in a product or a document.

Sole Proprietorship

Companies owned, operated, and managed by a single person.

Partnership

A business entity owned by two or more people.

Corporations

Independent, legal, business entities. Owners are referred to as stockholders.

Limited Liability Company (LLC)

A hybrid type of business entity that has limited liability of individual owners and tax and operational benefits similar to sole proprietorships and partnerships.

Joint Venture

An agreement between two or more individuals or companies formed to complete a single business enterprise.

Workers Compensation

Compensates a worker for a portion of their lost wages and medical expenses for injuries that occurred at work.

Builder's Risk

An insurance that builders purchase that protects them from building damage that occurs while under construction.

General Liability

Protects the contractor from claims by a 3rd party of bodily injury, injury to person, and property damage as a result of ongoing operations.

Errors and Omissions

Protects designers from incomplete, incorrect, and faulty design documents.

Value Engineering (VE)

A function analysis that seeks to lower cost alternatives for the services provided by the building.

Sub-contract

A contract in which one party involves a third part to carry on a portion of its responsibilities.

Joint Contract

A contract in which a number of individuals are represented as one party and forgiveness of any individual by the plaintiff implies forgiveness of the rest of the individuals making that party.

Several Contract

A contract in which a number of individuals are represented as one party but forgiveness of any individual by the plaintiff does not imply forgiveness of the rest of the individuals making that party.

Substantial Completion

The completion stage at which the owner can use the project for its intended purpose.

Termination for Convenience

Contractual right given to the owner to end the contract at no fault of the contractor; contractor is paid for work in place.

Termination for Default

Contractual right given to the owner to end the contract because of contractor’s breach (violation) of contract terms.

Compensatory Damages

To compensate for losses incurred by the non-breaching party and place it back in the same economical position prior to the breach.

Liquidated Damages

They compensate the owner for losses due to late completion of the project caused by contractor. Typically a set dollar amount per day past the contract completion date.

General Contractor (GC)

Serves as one point of responsibility to the owner, facilitates interpretation of documents for subs, coordinates the work and the schedule to ensure timely completion of the project and is responsible for the jobsite safety.

Subcontractors

Primarily the specialty trades: Mechanical, Electrical, Fire, Glazing, Painters.

Pay if Paid

Owner must pay for GC to have the obligation to pay subs. This makes subs and the GC both liable for owner insolvency.

Pay when paid

Payment required of GC and when is only a question of timing.

Bid Shopping

Exercise in which a GC is unfairly pitting bidders against one another to get each to lower its price.

Promissory Estoppel

If a party relies to its detriment on the promise of another party, the other party must be held responsible to its promise to avoid harm to the first party.

Warranties

Contractor’s warranty usually last for one year and begins at Substantial Completion or project final acceptance, guarantee of performance during a set period of time.

Open Invitation to Bid

Open to all responsible bidders having financial ability, experience, and required resources.

Non-collusion affidavit

Written document stating that the bidder did not collaborate/cooperate/share any specifics of its bid with other bidders.

Bid Bond

Used to ensure that the principal will honor their bid and enter into a contract with the obligee for the bid amount after the bid opening.

Performance Bond

Guarantee ensuring the obligee that the principal will perform all work in accordance with the terms of the agreement.

Payment Bond

Also known as 'labor and material bonds,' guarantees the obligee that the principal will pay their bills for labor and materials provided on the project.

Surety Bond

Written document given by principal & surety to oblige guaranteeing a specific obligation. Principal – party under obligation (contractor), Surety – party guaranteeing principal’s performance (bonding comp), Obligee – party benefiting from bond (owner).

Indemnity agreement

Between principal & surety where principal pledges assets that the surety can obtain to offset any expense or loss on the bond.

Change Order

Written instructions to contractor signed by owner and A/E authorizing: addition, deletion, or revision of work, or adjustment of contract sum/time after execution of the contract.

Open Shop

A business whose labor relations are not governed by a labor agreement.

Right-to-work law

A state law that prohibits prehire agreements.

Collective Bargaining

The process by which representatives of employers and employees hammer out a labor agreement.

Prehire Agreement

An agreement between a contractor and a union in which the contractor agrees to hire workers who will become members of the union.

Sherman Antitrust Act of 1890

The first law that made all contracts, trusts, and conspiracies that restrain trade or commerce illegal.

Clayton Act of 1914

A law that specifically removed unions from falling under the Sherman Antitrust Act.

Davis Bacon Act of 1931

A law that states the prevailing wages for an area shall be paid on all federally funded and federally assisted projects valued above $2,000.

Norris-LaGuardia Act of 1932

An act whose primary purpose was to prevent federal courts from issuing injunctions against union activities occurring in the context of labor disputes. This anti-injunction movement made it very difficult for an employer to obtain an injunction against union activities.

Buy America Act of 1933

A law that requires the use of U.S.-produced or U.S.-mined goods unless a local shortage exists.

National Labor Relations Act (Wagner Act) of 1935

A law that was designed to protect union organizing activities and foster collective bargaining.

Walsh-Healy Public Contracts Act of 1936

Requires all persons employed by a contractor to be paid no less than the prevailing minimum wage for industry in the locality for any contract involving the manufacture or furnishing of materials valued at over $10,000 to any U.S. government agency.

Fair Labor Standards Act (Wage and Hour Law) of 1938

Established the minimum wage, overtime pay, equal pay standards, and child labor standards.

Occupational Safety and Health Act (Williams-Steiger Act) of 1970

A law on safety that states that every employee is entitled to a safe and healthy place in which to work.

Local Public Works Law of 1977

Added to construction projects supported in part by federal funds that required 10 percent of the funds be diverted to minority business enterprises (MBEs).

EMR (Experience Modification Rate)

Multiplier that adjusts the premium based on their past work record.

NTP

A formal communication from a client to a contractor authorizing the start of work, confirming that all preconditions have been met.

Certificate of Occupancy

a document issued by a local government or building department certifying that a building is compliant with applicable building codes and is safe for occupancy.

Overhead and Profit

Costs associated with running a construction project, including indirect expenses like utilities, salaries of non-working employees, and profit margins.

CGL Insurance

Contractor's General Liability Insurance covers contractors against claims for bodily injury, property damage, and personal injury from their work, protecting them from financial losses due to legal disputes.