CIPS L4M3 Exam - Topic 3 Question 56 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 56
Topic #: 3

[All L4M3 Questions]

EAC Facilities Management is planning for a new construction project in the suburban are

a. They decide to use NEC or FIDIC model form of contract for this project. Is this a right course of action?

AYes, these forms aim at balanced risk/reward allocation between the parties

BNo, the buyer will bear all the risks derived from the contract

CYes, using these forms will eliminate all the risks

DNo, the contractor won't understand the legal terminology in the contract forms

Show Suggested Answer

Suggested Answer: A

Construction procurement is particularly complex and risky. Forming a contract in construction may take lots of time and energy of both client and contractor. Therefore, standardisation in construction contract would help the buying organisation to save their precious resources. Furthermore, the wording of these model form contracts is accurate as it has been agreed among the professionals within an industry.

One of the advantage of using model forms of contract is the balanced of risk and reward allocation between the contractor, consultant engineer and the client.

- An Introduction to FIDIC model contracts

- CIPS study guide page 139-147

LO 3, AC 3.1

by Janine at Mar 18, 2025, 09:11 AM

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Leandro

2 months ago

Wait, can they really eliminate all risks? Sounds too good to be true.

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Sanjuana

2 months ago

Totally agree, they promote fair risk-sharing.

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Precious

3 months ago

Not sure about that, the buyer still takes on a lot of risk.

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Loise

3 months ago

The legal jargon can definitely confuse contractors.

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Tabetha

3 months ago

NEC and FIDIC are great for risk management!

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Venita

3 months ago

I recall that option D might be an overstatement; contractors usually get help understanding legal terms, right?

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Cristy

4 months ago

I practiced a similar question, and I think option C is misleading because no contract can eliminate all risks.

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Lang

4 months ago

I'm not entirely sure, but I feel like option B could be valid if the buyer doesn't manage the risks well.

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Maryann

4 months ago

I remember studying that NEC and FIDIC contracts are designed to promote collaboration, so I think option A makes sense.

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Camellia

4 months ago

The mention of legal terminology being an issue for the contractor is an interesting point. I'll make sure to consider how user-friendly and accessible these contract forms are in my response.

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Albert

4 months ago

Hmm, I'm not sure about the claim that these forms eliminate all risks. That seems too good to be true. I'll need to think carefully about the pros and cons of these contract models before answering.

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Dong

5 months ago

I'm a bit confused by this one. The wording about the buyer bearing all the risks makes me unsure if these forms are really balanced. I'll need to review the key features of these contract models to decide.

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Trinidad

5 months ago

This question seems straightforward - the NEC and FIDIC forms are designed to balance risks between the parties, so using them would be the right course of action.

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