Chapter 3 — Exercises

Work these with the chapter open. Several build directly on the Northgate and Willow Street numbers, so keep the chapter and Appendix K within reach. Selected answers are in Appendix J; where an exercise has a single numeric answer, it is given here in a <details> block so you can check your arithmetic without checking your reasoning.

Difficulty legend: ⭐ basic recall and comprehension · ⭐⭐ applied analysis · ⭐⭐⭐ judgment, trade-offs, and multi-step work · ⭐⭐⭐⭐ research and extension beyond the chapter

Part A — Conceptual Understanding ⭐

A1. In one sentence each, define delivery method, contract type, and selection method, and give one example of each. Then explain why an owner who says "we're doing a GMP" has told you only one of the three.

A2. Draw the contractual relationship diagram for design-bid-build from memory. Label every line as "contract" or "communication only." Then explain, in two sentences, why the missing line is the source of the method's characteristic failure mode.

A3. State the principle sometimes called the Spearin doctrine in your own words, without using the words "warranty" or "Spearin." Then give one example of a situation it would cover and one it would not.

A4. What is the difference between competitive design-build and progressive design-build? Name one advantage and one cost of each.

A5. A CM at risk plays two different roles on the same project. Name them, name the moment the role changes, and name one incentive that points in a different direction in each role.

A6. List the six lines that sit above the "guaranteed maximum price" line in the Northgate GMP build-up, in order, without looking. Then check §3.4.2 and note which ones you missed.

A7. Explain the difference between a CM at risk and a CM as agent in terms of a single question: who pays when the cost of the work exceeds the contract price?

A8. Name the five structural features of an integrated project delivery agreement described in §3.6. For each, say in one clause what problem it is trying to solve.

A9. What is a bridging document, and why does using one partially undo the main benefit of design-build?

A10. In job order contracting, what is a coefficient and what is it applied to? Give one project type JOC suits well and one it suits badly.

Part B — Applied Analysis ⭐⭐

B1. A community college is replacing a 40-year-old science building. The design is 100% complete and has been sitting on a shelf for two years while the college waited for bond funding. The college has one facilities director and no construction staff. State law requires competitive sealed bidding for projects over a threshold this project exceeds.

Recommend a delivery method. Then identify the single largest risk the college is accepting and one thing it can do before bidding to reduce it.

B2. Re-read the Rivermont Elementary bid tab in §3.10.3. The spread from low to high is 11.1%. Write a short memo (150 words) to a public owner explaining what a spread that wide tells them before they award, and what two things they might do about it.

B3. A hospital system tells you it wants design-build "because we don't want to manage a design team." During the interview you learn that the surgical services department has changed its room-count requirements three times in the past eight months and the chief of surgery is being replaced next year.

What do you tell them, and why? Be specific about the mechanism that will hurt them.

B4. An owner's representative argues that CM at risk is "just cost-plus with extra steps, and the CM will always spend the whole contingency." Rebut this in one paragraph using a specific mechanism from the chapter, not an appeal to trust.

B5. Under a multiple-prime (CM as agent) arrangement, the framing contractor and the drywall contractor each believed the other was installing in-wall blocking for the gymnasium's wall-mounted equipment. Nobody did. The blocking now has to be installed after drywall.

Who pays, and why? How would the answer change under a general contractor or CM-at-risk arrangement?

B6. Explain to a first-year field engineer why a design-builder's obligation for the design portion of its work is usually a standard of care rather than a warranty, and why an owner should care about the difference before it negotiates a "fitness for purpose" clause.

B7. In §3.8.2, the reconciliation from the $47,500,000 GMP down to a $45,850,000 hard bid has seven steps. Sort the seven steps into three buckets: real savings to the owner, risk repriced (comes back later), and real added cost under DBB. Defend any step you found hard to classify.

B8. Northgate's GMP includes a $575,200 escalation allowance. Under a hard-bid lump sum, that line does not exist. Where does the escalation risk go, and name two specific ways a contractor who guessed wrong tries to recover it.

Part C — Calculations & Deliverables ⭐⭐–⭐⭐⭐

C1 — Build a GMP. A construction manager is converting to a guaranteed maximum price on a $31,200,000 direct cost of work. General conditions are budgeted at $4,150 per calendar day over a 480-calendar-day contract. Insurance and bonds are 2.0% of the direct cost of work. Construction contingency is 3.5% of the sum of direct cost, general conditions, and insurance/bonds. The CM fee is 3.75% of that subtotal. The escalation allowance is $410,000.

Build the GMP table line by line and state the final number and the cost per square foot for a 96,000 SF building.

C2 — Savings split. Using the GMP from C1, assume at final accounting the actual cost of the work plus general conditions plus insurance and bonds came to $34,050,000, and the fee was earned in full at $1,312,484.

(a) What is the unused amount under the cap? (b) Under a 75/25 owner/CM split, what does each party receive? (c) Under a 50/50 split? (d) In two sentences, describe how the CM's day-to-day behavior would differ between (b) and (c).

C3 — The schedule is the money. A university needs a 62,000 SF academic building. Under CM at risk, the construction period is 430 calendar days with construction starting concurrent with the last of design. Under design-bid-build, the university must first complete 96 additional calendar days of design, then run a 30-calendar-day bid period and 21 calendar days to award and bond, and the construction period lengthens to 470 calendar days.

The university currently leases 62,000 SF of swing space at $92,000 per month, which it can release only when the new building opens.

(a) How many additional calendar days does DBB add to the date of substantial completion? (b) Convert to months (use 30.4 days per month) and compute the additional swing-space rent. (c) If the CM's negotiated fee is $340,000 higher than a hard bidder's expected overhead and profit, is CM at risk worth it on these two factors alone? Show the net.

C4 — Reconcile two prices. A $19,600,000 CM-at-risk GMP for a municipal recreation center is built up as: direct cost of work $16,300,000; general conditions $1,340,000; insurance and bonds $392,000; contingency $540,000; fee at 3.5% of subtotal; escalation allowance $190,000.

Your estimating department believes a hard-bid contractor would have (i) buried only $210,000 of contingency, (ii) carried no escalation allowance, (iii) added $470,000 of direct cost for pricing without constructability input, (iv) added 38 calendar days of general conditions at $2,900 per calendar day, and (v) carried overhead and profit at 2.0% of subtotal instead of 3.5%.

(a) Verify the $19,600,000 GMP. (b) Build the reconciliation ladder to the hard-bid number. (c) State how much of the difference is permanent savings to the owner and how much is risk that has been moved rather than removed.

C5 — Score the decision. Build a weighted scoring worksheet, in the format of §3.9.2, for the Willow Street Community Center. Set your own weights (1–5) for the seven factors and defend each weight in one clause. Score all five methods 1–5. Compute the weighted totals.

Then do the part that matters: change one weight by two points, recompute, and report whether the winner changes. Write two sentences on what that tells you about the model.

C6 — Write the criteria line. Rewrite this design-build criteria sentence so that it cannot produce the dispute in case study 2:

"Concrete slab on grade shall be suitable for warehouse operations, minimum 8 inches thick, 4,000 psi."

Your replacement must specify a measurable performance requirement, identify what the owner will furnish and when, and state what happens if the owner's information arrives late. Three sentences maximum.

C7 — The one-page memo. Complete the Willow Street delivery-method comparison memo from the Project Checkpoint. One page. Four sections. Bring a number to sections 2 and 3.

Part D — Judgment & Ethics ⭐⭐⭐

D1. You are the CM at risk on a hospital project. The owner's project executive is under pressure from a board meeting in three weeks and asks you to give a GMP at 45% construction documents. You know the number will be a guess. You also know that if you say no, the owner may go to a competitor who will say yes.

What do you do? Write what you would actually say in that meeting — the words, not the principle. Then name the one contractual device that would let you say yes responsibly, and describe its limits honestly.

D2. Curtis Boone stopped writing early RFIs after his gym-roof change order was denied. His reasoning was economically rational from inside his position. Is what he did wrong? Separate three questions: (a) is it a breach of contract, (b) is it a professional-ethics failure, and (c) is it good business? Answer each and note where they disagree.

D3. A design-builder discovers, during design, that the owner's criteria document contains a requirement that is unnecessarily expensive and that the owner almost certainly does not actually need. Meeting it will cost $680,000. Saying nothing means the design-builder is paid to build something wasteful. Saying something means giving up $680,000 of contract value that is already priced and signed.

What does the design-builder owe the owner here? Does the answer change if the contract is lump sum versus GMP with a savings split? Does it change if the owner is a public agency?

D4. An owner runs a competitive design-build procurement, receives four proposals with four different preliminary designs, and then — rather than awarding — cancels the procurement and reissues it as design-bid-build using the best ideas from all four proposals in the bridging documents.

Is this legal? Is it ethical? What contractual and procedural devices exist to prevent it, and who bears the cost when it happens?

D5. You are the preconstruction lead on a CM-at-risk project. Your estimate at design development carries a mechanical number you privately believe is 6% high, because the market is softening and you expect a good buyout. Disclosing that belief lowers the GMP and reduces your contingency cushion. Not disclosing it means a comfortable number and, most likely, a savings-split payment at the end.

Where is the line? Write the sentence you would put in the GMP qualifications list that keeps you on the right side of it.

Part M — Mixed / Interleaved Practice ⭐⭐–⭐⭐⭐

M1 (with Chapter 1). Take the project lifecycle from Chapter 1 and annotate it with two additional rows: (a) at which phase the construction manager enters under each of the five delivery methods, and (b) at which phase the price becomes fixed under each. Then write three sentences on the relationship between those two rows.

M2 (with Chapter 1). Chapter 1 described what a construction manager is accountable for. Using the table in §3.10.1, rewrite that accountability statement three times — once for a CM at risk, once for a CM as agent, and once for a design-build project manager. Where the statements differ, say what contract provision causes the difference.

M3 (with Chapter 2). Chapter 2 established the contractual tiering and the thin margins at each tier. Choose one delivery method and trace what it does to the subcontractor tier specifically: how the sub is selected, when it learns the scope, who it can talk to, what its margin looks like, and what recourse it has when the documents are wrong. Then do the same for a second method and compare.

M4 (with Chapter 2). Using Chapter 2's picture of the construction market, explain why a region with only two qualified design-build teams should probably not run a competitive design-build procurement, even for a project that is a perfect technical fit for the method. What should the owner do instead?

M5 (with Chapter 1 and Chapter 2). Write a one-page briefing for a first-time private owner — a restaurant group building its first freestanding building — that answers three questions in plain language: what a construction manager does, who all the parties are, and how to choose a delivery method. No jargon that you have not defined. Assume they have twenty minutes and no construction background.

M6 (forward-looking). Without reading ahead, predict three things Chapter 4 will have to explain about a guaranteed maximum price that this chapter did not. Write them down. After you read Chapter 4, come back and score yourself.

Part E — Research & Extension ⭐⭐⭐⭐

E1 — Your own jurisdiction. Find out what delivery methods your state or province actually authorizes for public building construction, and under what conditions. Look for: whether design-build is permitted and for which agency types; whether CM at risk (sometimes called CM/GC or construction manager/general contractor) is permitted; whether there are project-size thresholds; whether a written justification or approval is required; and whether multiple-prime contracting is mandated for any category of work. Cite the statute or agency guidance you found and note the date you looked, because this area changes.

Write a one-page summary. This is a genuinely useful document to have in your files, and you will be surprised how few working professionals can produce one.

E2 — Read a real criteria document. Find a publicly posted design-build request for proposals — state departments of transportation, university systems, and federal agencies frequently post them. Read the owner's criteria or performance specification section. Then answer: what is specified in measurable numbers, and what is specified with words like "adequate," "suitable," "industry standard," or "as required"? List five instances of the second kind and, for each, write the dispute it could produce.

E3 — Compare the document families. The AIA, ConsensusDocs, DBIA, and EJCDC each publish a family of standard agreements covering multiple delivery methods. Without quoting clause text, build a table that maps which family serves which delivery method and which industry constituency drafted it. Then answer the question that matters: why would an owner choose one family over another, and what does the drafting constituency tell you about where the risk allocation defaults will sit?