CIPS L4M3 Commercial Contracting Online Training

Question #11

Required safety level

A . 1 and 2 only
B . 1 and 3 only
C . 1 and 4 only
D . 2 and 3 only

Correct Answer: D
D

Explanation:

According to CIPS, there are two main types of specification:

– Conformance specification C is more output driven as it outlines the product details exactly which may include the material, dimensions, tolerances, source, ingredients, packaging, storage of the part or material.

– Performance specification C is more output driven in terms of what the part or material must achieve.

Among the four options, only 2. ‘Description of the operating environments’ and 3. ‘Chemical formulae’ are possible components of a conformance specification. Brand names can be a part of a performance specification, according to a document published by CIPS and NIGP.

Graphical user interface, text, application

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Reference:

– CIPS study guide page 8-10

– Knowledge Byte – Specification Development

– Principles and Practices of Public Procurement: Specifications LO 1, AC 1.1

Question #12

A construction company often subcontracts approximately 50% of the project works because of unpredictable customer’s demand. Although larger corporate customers require quick response to RFQ, the time lapse between tender bid submission and contract commencement is usually long.

Which of the following arrangement would benefit both the contractor and customer?

A . Collateral contract
B . Bilateral contract
C . Indemnity agreement
D . Framework agreement

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Correct Answer: D
D

Explanation:

According to the scenario, customers’ demand changes regularly but the construction project commencement often delays. If the contractor and the customer mutually sign a legally binding contract too soon long before the commencement, the contractor may suffer poor cash flow (it must buy the materials first but has to wait for long time to be paid). A framework agreement may help both parties.

A framework agreement is a formal agreement between two organisations that is intended

to become legally binding in the event that a contract is created.

A framework agreement could benefit the both parties in the following ways:

– At the time of signing, the framework agreement has not yet become a legally binding contract. The contractor and client only agree on the principles of future contracts (such as whether the work can be subcontracted or how payment will be proceeded). A well structured framework agreement will allow both parties to apply changes before contract commencement, especially regarding price and quality.

– The framework agreement assures a certainty between the contractor and client.

– The administrative works is reduced under a framework agreement.

Reference:

– CIPS study guide page 60-62

– Framework Agreements: Practice and Pitfalls LO 1, AC 1.3

Question #13

The model form contract invented by Institute of Civil Engineers is…?

A . NEC
B . IMechE/IET
C . FIDIC
D . JCT

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Correct Answer: A
A

Explanation:

NEC – New Engineering Contracts is a family of contracts invented by Institute of Civil Engineers. The contracts are suitable for procuring a diverse range of works, services and supply, ranging from major framework projects through to minor works and the purchase of supplies and goods.

FIDIC is a French language acronym for Fédération Internationale Des Ingénieurs-Conseils, which means the international federation of consulting engineers. It was started in 1913 by the trio of France, Belgium and Switzerland. The United Kingdom joined the Federation in 1949. FIDIC is headquartered in Switzerland and now boasts of membership from over 60 different countries. FIDIC published its first contract, titled The Form of contract for works of Civil Engineering construction, in 1957. As the title indicated, this first contract was aimed at the Civil Engineering sector and it soon became known for the colour of its cover, and thus, The Red Book. It has become the tradition that FIDIC contracts are known in popular parlance by the colour of their cover. This first contract by FIDIC was undertaken jointly with the International federation of Building and Public works. FIDIC’s concerted effort at achieving broad consultation and acceptance of its contract forms has seen subsequent editions of its contracts being ratified by the International Federation of Asian and Western Pacific Contractors Association, Associated General Contractors of America and the Inter-American Federation of the Construction Industry, Multilateral Development Banks among others. Because of the broad support it enjoys, FIDIC contracts are the foremost contracts in international construction.

The Joint Contracts Tribunal, also known as the JCT, produces standard forms of contract for construction, guidance notes and other standard documentation for use in the construction industry in the United Kingdom. From its establishment in 1931, JCT has expanded the number of contributing organisations.

IMechE/IET: Institution of Mechanical Engineers/Institution of Engineering and Technology

– two separate institutes that issue jointly agreed model forms covering the design, supply and installation of electrical, electronic and mechanical plant including special conditions for

the ancillary development of software.

Reference: CIPS study guide page 142

LO 3, AC 3.1

Question #14