NASCLA PRACTICE EXAM QUESTIONS
WITH COMPLETE SOLUTIONS
Performance Bond correct answer: Guarantees that the
contractor will complete a contract with in its time frame and conditions
Payment Bonds correct answer: Guarantees subcontractors and
suppliers that they will be paid for work if they perform properly under a contract
Maintenance bond correct answer: Guarantees that for stated
Typically one year no defective workmanship or material will appear in the completed project
Completion bond correct answer: Provide assurance to the
financial backers have a construction project but it will be completed on time
Fidelity bond correct answer: Covers business owners for losses
due to dishonest act by there employees
Lien bond correct answer: Guarantees that liens cannot be
placed against the owners property by contractors for payment of service
Sub contractors bond correct answer: Protects the general
contractor in the event that subcontractors do not fully perform the contract and or pay for labor and materials 1 / 3
Bank letter of credit correct answer: Is not a Bond but is it cash
guaranteed to the owner it is not a guarantee of performance but can be converted to a payment to the owner by a bank or lending institution
Bid bond correct answer: Guarantees that the contractor if
awarded the job will do the work at the submitted bid price enter into a contract with the owner and furnish the required performance and payment bonds
What is a bond correct answer: Bonds provide protection in the
event that the contractual obligation's are not met
Bond language correct answer: At a minimum Bond should
contain the total dollar amount length of the bond requirements for notice of the fact or lack of maintenance and bond enforcement
Filing procedures correct answer: Construction law contractual
relationships govern the bond claims process the filing process as outlined in the bond
Project changes correct answer: Unless specifically outlined in
the bonds agreement the Surety company will not cover changes to the original contract in most cases request for additional coverage must be made and the bonding company must be notified of the contract changes
Payment in the event of default correct answer: In the event of
default Surety may provide additional finances arrange for a 2 / 3
new contractor or hire subcontractors to complete the work or pay out the amount of the bond
Miller act of 1935 correct answer: Current law requiring
performance and payment bond on a federal construction project value greater than $100,000
Miller act amounts correct answer: 50% on contracts less than 1
million 40% of contracts between one and 5 million 2.5 million payment bond for contracts in excess of 5 million
Little Miller act correct answer: Similar to the Miller act for
public works projects Construction Industry payment protection act of 1999 correct
answer: Addendum to the miller act it's purpose is to improve
payment bond protections for persons who furnish labor or material for use on federal construction projects to help subcontractors with adequate protection
All risk builders risk insurance correct answer: A form of
property insurance that covers property owners and builders for buildings under construction
All risk coverage correct answer: Provides for Direct loss by
these perils that are not specifically excluded by the policy it generally provides coverage for all risks including theft vandalism accidental loss and damages or distraction
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