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AK General Contractor practice questions

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Question 1Business and Financial Management

Which financial statement reports a contractor's revenues, expenses, and net profit over a period of time?

  1. Income statement Correct answer.
  2. Balance sheet
  3. Statement of cash flows
  4. Work-in-progress schedule

Explanation

The income statement summarizes revenues and expenses over an accounting period and derives net profit or loss. The balance sheet instead shows assets, liabilities, and equity at a single point in time. The statement of cash flows tracks cash movement, and a WIP schedule tracks project-level revenue and cost recognition.

Question 2Business and Financial Management

A contractor's balance sheet lists total assets of $850,000 and total liabilities of $520,000. What is the owner's equity?

  1. $520,000
  2. $1,370,000
  3. $850,000
  4. $330,000 Correct answer.

Explanation

Equity equals total assets minus total liabilities under the basic accounting equation. Here $850,000 minus $520,000 yields $330,000 of owner's equity. Adding the two figures would misstate equity by combining assets with obligations.

Question 3Business and Financial Management

In construction accounting, what does the term 'retainage receivable' represent?

  1. The contractor's markup on change orders
  2. Money the contractor owes subcontractors
  3. A deposit paid to secure a surety bond
  4. A percentage of earned contract revenue withheld by the owner until project completion Correct answer.

Explanation

Retainage is a portion of earned progress payments the owner holds back, typically until substantial or final completion, to protect against incomplete or defective work. It is recorded as a receivable because the contractor has earned the revenue but not yet collected the cash. It is not a payable to subs, a bond deposit, or a markup.

Question 4Business and Financial Management

Which document typically authorizes a contractor to proceed with work and establishes the contract sum and schedule?

  1. Notice to proceed Correct answer.
  2. Daily field report
  3. Punch list
  4. Lien waiver

Explanation

A notice to proceed formally directs the contractor to begin work and references the agreed contract sum and schedule. A punch list records incomplete or defective items near completion, a lien waiver releases lien rights, and a daily report records field activity. Only the notice to proceed authorizes commencement under the contract terms.

Question 5Business and Financial Management

A contractor bills a project $12,000 for materials and applies a 15% markup. What is the billed amount?

  1. $13,800 Correct answer.
  2. $10,200
  3. $12,150
  4. $13,200

Explanation

Markup is computed on the base cost and added to it. Fifteen percent of $12,000 is $1,800, so the billed amount is $12,000 plus $1,800, or $13,800. Applying the percentage as a dollar figure or subtracting it would understate the bill.

Question 6Business and Financial Management

What is the primary purpose of a surety performance bond on a construction project?

  1. To guarantee the owner is paid if the contractor defaults
  2. To guarantee the contractor will complete the work per the contract Correct answer.
  3. To fund the contractor's working capital
  4. To insure the contractor's equipment against theft

Explanation

A performance bond protects the owner by guaranteeing the contractor will perform the contract; if the contractor defaults, the surety may complete the work or pay damages. A payment bond, by contrast, protects parties who supply labor and materials. Bonds are not equipment insurance or working capital financing.

Question 7Business and Financial Management

Under a time-and-materials contract, how is the contractor typically compensated?

  1. A fixed lump sum regardless of actual cost
  2. A share of the project's savings at completion
  3. Actual labor hours at agreed rates plus materials at cost with an agreed markup Correct answer.
  4. A percentage of the owner's total project budget

Explanation

Time-and-materials pricing reimburses actual labor hours at established rates and materials at cost, often with a defined markup. It differs from lump sum, which fixes price regardless of cost, and from cost-plus arrangements tied to budgets or savings. The defining feature is payment for actual time and materials consumed.

Question 8Business and Financial Management

Which of the following is a current liability on a contractor's balance sheet?

  1. A five-year building mortgage
  2. Excavation equipment owned outright
  3. Accounts payable due in 30 days Correct answer.
  4. Retained earnings

Explanation

Current liabilities are obligations due within one year, and accounts payable due in 30 days qualifies. Equipment owned outright is a fixed asset, a long-term mortgage is a noncurrent liability, and retained earnings is part of equity. Only the short-term payable is a current liability.

Question 9Business and Financial Management

A contractor has a contract price of $500,000, estimated total cost of $400,000, and has incurred $100,000 of cost to date. Using the percentage-of-completion method based on cost, what revenue should be recognized to date?

  1. $100,000
  2. $125,000 Correct answer.
  3. $500,000
  4. $400,000

Explanation

Percentage complete equals cost incurred divided by total estimated cost, or $100,000 divided by $400,000, which is 25%. Revenue recognized to date is 25% of the $500,000 contract price, or $125,000. Using raw cost or the full price ignores the proportional recognition rule.

Question 10Business and Financial Management

What does a contractor's work-in-progress (WIP) schedule primarily help management monitor?

  1. Employee payroll tax withholding
  2. Monthly office rent obligations
  3. Over- and under-billings relative to earned revenue Correct answer.
  4. Equipment depreciation schedules

Explanation

The WIP schedule compares revenue earned on each project with amounts billed to identify overbilling (a liability) or underbilling (an asset). It is central to construction financial oversight because it reveals cash position relative to job progress. Payroll taxes, depreciation, and rent are tracked in other records.

Question 11Business and Financial Management

A contractor's gross profit on a job is $90,000 and job revenue is $600,000. What is the gross profit margin?

  1. 6.7%
  2. 66.7%
  3. 15% Correct answer.
  4. 20%

Explanation

Gross profit margin equals gross profit divided by revenue. Here $90,000 divided by $600,000 equals 0.15, or 15%. Dividing revenue by profit or misplacing the decimal yields incorrect percentages.

Question 12Business and Financial Management

Which action best improves a contractor's working capital position?

  1. Collecting outstanding receivables more quickly Correct answer.
  2. Increasing long-term debt to buy land
  3. Purchasing equipment with cash
  4. Declaring a large owner distribution

Explanation

Working capital is current assets minus current liabilities, so converting receivables to cash strengthens current assets without adding current liabilities. Cash purchases of equipment reduce current assets, long-term borrowing for land adds a noncurrent liability, and owner distributions reduce equity and cash. Faster collection is the direct improvement.

Question 13Business and Financial Management

What is the accounting treatment when a contractor determines a project will incur a loss under percentage-of-completion accounting?

  1. Defer the loss until the project is complete
  2. Recognize the entire expected loss immediately Correct answer.
  3. Record the loss as a contingent asset
  4. Recognize the loss only as costs are incurred

Explanation

Under percentage-of-completion, an expected loss on a contract must be recognized in full as soon as it becomes evident, not spread over remaining work. This conservative rule prevents overstating profit on troubled jobs. Deferral or gradual recognition would misstate current-period results.

Question 14Business and Financial Management

A contractor's overhead costs total $240,000 per year and annual direct labor cost is $1,200,000. What overhead rate per dollar of direct labor should be applied?

  1. $5.00
  2. $0.20 Correct answer.
  3. $0.50
  4. $0.25

Explanation

The overhead rate equals overhead cost divided by the labor base. Here $240,000 divided by $1,200,000 equals 0.20, so $0.20 of overhead applies per dollar of direct labor. Inverting the ratio or misplacing the decimal produces the other figures.

Question 15Business and Financial Management

Which contract provision shifts the risk of unforeseen site conditions to the owner?

  1. A differing site conditions clause Correct answer.
  2. A pay-when-paid clause
  3. A liquidated damages clause
  4. A no-damage-for-delay clause

Explanation

A differing site conditions clause allows the contractor to recover additional cost or time when actual conditions differ materially from those indicated in the contract. A no-damage-for-delay clause limits delay claims, liquidated damages fix delay penalties, and pay-when-paid governs payment timing. Only the differing site conditions clause addresses unforeseen physical conditions.

Question 16Business and Financial Management

What is the purpose of a preliminary (pre-lien) notice served by a subcontractor?

  1. To preserve the right to file a mechanic's lien if unpaid Correct answer.
  2. To terminate the subcontract for cause
  3. To transfer the subcontract to another party
  4. To demand immediate payment from the general contractor

Explanation

A preliminary notice informs the owner and lender that a party is furnishing labor or materials, preserving that party's lien rights if payment is not made. It is a protective notice, not a payment demand or termination action. Failing to serve it can forfeit lien rights under many statutes.

Question 17Business and Financial Management

A contractor's quick ratio is calculated as cash plus receivables divided by current liabilities. If cash is $80,000, receivables are $120,000, and current liabilities are $100,000, what is the quick ratio?

  1. 0.80
  2. 2.00 Correct answer.
  3. 3.00
  4. 1.00

Explanation

The quick ratio excludes inventory and other less-liquid current assets. Here cash plus receivables equals $200,000, divided by $100,000 of current liabilities, gives 2.00. This indicates strong short-term liquidity coverage.

Question 18Business and Financial Management

Which of the following best describes the 'cash flow' risk unique to construction contracting?

  1. Labor is paid only at project completion
  2. Costs are incurred before progress payments are collected Correct answer.
  3. Revenue is collected before work is performed
  4. Equipment is fully depreciated each year

Explanation

Contractors typically pay labor, materials, and subcontractors before the owner approves and pays progress invoices, creating a timing gap. This front-loaded cost pattern makes working capital critical. Revenue is generally collected after work, not before, and labor is paid regularly rather than at completion.

Question 19Business and Financial Management

A contractor's equipment has an initial cost of $120,000, a salvage value of $20,000, and a useful life of 5 years. Using straight-line depreciation, what is the annual depreciation expense?

  1. $20,000 Correct answer.
  2. $24,000
  3. $12,000
  4. $28,000

Explanation

Straight-line depreciation equals cost minus salvage value, divided by useful life. Here $120,000 minus $20,000 equals $100,000, divided by 5 years, gives $20,000 per year. Ignoring salvage or misplacing the useful life produces the other figures.

Question 20Business and Financial Management

What is the primary role of a contractor's certified public accountant in a bonding capacity review?

  1. Designing the project schedule
  2. Providing audited or reviewed financial statements to the surety Correct answer.
  3. Negotiating subcontractor prices
  4. Approving change orders

Explanation

Sureties rely on CPA-prepared financial statements, particularly audited or reviewed reports, to assess a contractor's financial strength and capacity. The CPA does not negotiate subcontracts, plan schedules, or approve change orders. Accurate financial reporting directly supports bonding limits.

Question 21Business and Financial Management

A contractor is analyzing whether to self-perform or subcontract a scope of work. Which financial factor most directly supports self-performing?

  1. The subcontractor offers a lower bid than the contractor's cost
  2. The owner prohibits subcontracting on the project
  3. The contractor has idle crews and equipment that would otherwise absorb fixed costs Correct answer.
  4. The scope requires specialized licensing the contractor lacks

Explanation

When fixed overhead and equipment costs exist regardless of workload, self-performing with idle resources can absorb those costs and improve contribution margin. A lower sub bid favors subcontracting, missing licenses prevent self-performance, and owner restrictions may forbid it. The idle-resource condition is the financial argument for self-performance.

Question 22Business and Financial Management

A contractor has an underbilling of $150,000 on a project. How does this most likely affect the balance sheet?

  1. It is recorded as a contingent liability
  2. It reduces retained earnings directly
  3. It appears as a current asset representing costs and profit earned but not yet billed Correct answer.
  4. It appears as a liability because the owner has overpaid

Explanation

Underbillings occur when revenue earned exceeds amounts billed, so the contractor has a cost and profit claim not yet invoiced. This is reported as a current asset, often labeled costs and estimated earnings in excess of billings. Overbillings, by contrast, are liabilities, and underbillings do not directly reduce retained earnings or represent contingencies.

Question 23Business and Financial Management

A contractor's revenue is $2,000,000, total assets are $1,000,000, and net profit is $80,000. What is the return on assets?

  1. 4%
  2. 2.5%
  3. 12.5%
  4. 8% Correct answer.

Explanation

Return on assets equals net profit divided by total assets. Here $80,000 divided by $1,000,000 equals 0.08, or 8%. Using revenue instead of profit or misplacing the ratio yields the other percentages.

Question 24Business and Financial Management

Under a guaranteed maximum price (GMP) contract with a shared savings clause, what happens if actual costs come in below the GMP?

  1. Savings are shared between owner and contractor per the agreed formula Correct answer.
  2. The owner receives the full benefit of the savings
  3. The contract price is retroactively reduced to actual cost
  4. The contractor keeps the entire savings regardless of the clause

Explanation

A GMP contract caps the owner's price, and a shared savings clause allocates any cost underrun between owner and contractor according to a stated formula. This incentivizes the contractor to control costs while giving the owner a benefit. Neither party automatically takes the full savings, and the price is not simply reset to actual cost.

Question 25Business and Financial Management

A contractor's annual fixed overhead is $500,000, and each project contributes 20% of revenue toward overhead and profit. What volume of revenue is required to break even on overhead?

  1. $4,000,000
  2. $2,500,000 Correct answer.
  3. $100,000
  4. $1,000,000

Explanation

Break-even revenue equals fixed overhead divided by the contribution margin rate. Here $500,000 divided by 0.20 equals $2,500,000 of revenue needed to cover fixed overhead. Dividing by the wrong rate or treating overhead as a percentage of itself yields the other figures.

Question 26Business and Financial Management

A contractor's balance sheet shows total assets of $1,800,000 and total liabilities of $1,100,000. What is the contractor's net worth (owners' equity)?

  1. $1,100,000
  2. $700,000 Correct answer.
  3. $1,800,000
  4. $2,900,000

Explanation

Owners' equity equals total assets minus total liabilities, so $1,800,000 minus $1,100,000 yields $700,000. Net worth is the residual interest in the assets after liabilities are satisfied and is a key figure surety underwriters review.

Question 27Business and Financial Management

Which document typically establishes the billing cycle, retainage percentage, and payment application procedures for a project?

  1. The subcontractor's certificate of insurance
  2. The owner-contractor agreement and its general conditions Correct answer.
  3. The equipment depreciation schedule
  4. The contractor's general ledger chart of accounts

Explanation

Payment terms such as billing frequency, retainage, and the approval process for pay applications are set by the contract documents, chiefly the agreement and general conditions. These provisions govern when and how the contractor is entitled to receive progress payments.

Question 28Business and Financial Management

A contractor bills a project using a 10% retainage on each progress payment. Cumulative completed work to date is $400,000, and prior billings already withheld $30,000 in retainage. What retainage amount should be withheld on the current billing?

  1. $10,000 Correct answer.
  2. $30,000
  3. $4,000
  4. $40,000

Explanation

Retainage on cumulative work is 10% of $400,000, or $40,000. Because $30,000 has already been withheld, the current billing withholds the difference of $10,000 to reach the correct cumulative total.

Question 29Business and Financial Management

A contractor's annual revenue is $3,000,000 and its average accounts receivable balance is $500,000. What does the receivables turnover of 6.0 times most directly indicate?

  1. The contractor carries six months of work in its backlog
  2. The contractor's gross profit margin is approximately 6%
  3. The contractor pays its suppliers about six times per year
  4. The contractor collects its average receivables about six times per year Correct answer.

Explanation

Receivables turnover equals revenue divided by average receivables, and it measures how many times the receivable balance is converted to cash during the period. A result of 6.0 means the average balance is collected roughly six times annually, implying an average collection period of about 61 days.

Question 30Business and Financial Management

A contractor's labor burden is 42% of base wages. A worker's base wage is $28.00 per hour, and the contractor wants a 15% markup on the fully burdened labor cost. What is the billed hourly labor rate?

  1. $39.76
  2. $45.13
  3. $45.72 Correct answer.
  4. $32.20

Explanation

The burdened cost is $28.00 times 1.42, or $39.76 per hour. Applying a 15% markup gives $39.76 times 1.15, or $45.72 per hour. Markup must be applied to the fully burdened cost, not the base wage alone.

Question 31Contracting Law and Regulations

Under Alaska law, a contractor's license is generally required for which of the following?

  1. Bidding on a project valued over $10,000
  2. Performing work for compensation on a project of any value Correct answer.
  3. Hiring subcontractors for a residential remodel
  4. Advertising construction services to the public

Explanation

Alaska requires a licensed contractor to perform construction work for compensation; the licensing trigger is offering or performing work for pay, not merely bidding or advertising. Advertising or bidding without a license is restricted, but the core licensed activity is performing the work for compensation.

Question 32Contracting Law and Regulations

An Alaska contractor license is issued for a defined period. What is the standard license term before renewal is required?

  1. Three years
  2. Two years Correct answer.
  3. One year
  4. Five years

Explanation

Alaska contractor licenses run on a two-year cycle, after which the licensee must renew and satisfy continuing education and other renewal requirements. Knowing the term matters for tracking renewal deadlines and avoiding lapses.

Question 33Contracting Law and Regulations

In Alaska, a residential contractor performing work on a homeowner's property generally must provide which of the following before starting work?

  1. A performance bond equal to the contract price
  2. A notarized lien waiver
  3. A certified copy of the contractor license to the homeowner
  4. A written contract for the work Correct answer.

Explanation

Alaska's home improvement and consumer protection rules require a written contract for residential work that meets certain thresholds, setting out scope, price, and payment terms. This protects homeowners and creates an enforceable record of the agreement.

Question 34Contracting Law and Regulations

An Alaska contractor who allows a subcontractor to work under the contractor's license in exchange for a fee is engaging in which prohibited practice?

  1. License lending Correct answer.
  2. Change order abuse
  3. Constructive acceleration
  4. Bid shopping

Explanation

Alaska prohibits a licensee from allowing another person to use the license, sometimes called license lending or renting. Doing so undermines the qualification and accountability that licensing is meant to ensure.

Question 35Contracting Law and Regulations

An Alaska contractor is issued a citation for unlicensed contracting. Which statement best describes the consequence?

  1. The contractor may be assessed a civil penalty and must stop the unlicensed work Correct answer.
  2. The citation is advisory and carries no monetary penalty
  3. The penalty applies only if the work exceeds $100,000 in value
  4. Only a criminal charge can result, with no civil penalty

Explanation

Alaska law authorizes civil penalties for unlicensed contracting, and the contractor must cease the unlicensed activity. The penalty framework operates independently of any criminal exposure and does not hinge on a large project threshold.

Question 36Contracting Law and Regulations

For a public works project in Alaska, the contractor's payment bond primarily protects which party?

  1. The owner against design defects
  2. The surety against the contractor's negligence
  3. Subcontractors and suppliers who furnish labor or materials Correct answer.
  4. The contractor against owner default

Explanation

On public works, a payment bond stands in place of mechanic's lien rights that are unavailable against public property, protecting subcontractors and suppliers who are not paid. It ensures those who furnish labor or materials have a source of recovery.

Question 37Contracting Law and Regulations

Alaska's Little Miller Act governs which of the following?

  1. Bonding requirements on state and local public works contracts Correct answer.
  2. Licensing of specialty contractors
  3. Residential escrow account handling
  4. Wage rates on federal projects

Explanation

Alaska's Little Miller Act is the state analogue to the federal Miller Act and sets bonding requirements for public works contracts awarded by the state and its political subdivisions. It ensures payment and performance protection on public construction.

Question 38Contracting Law and Regulations

An Alaska contractor wants to file a mechanic's lien against a private project. Which statement about lien rights is correct?

  1. A lien is automatically extinguished when the contractor is paid in full
  2. A lien may be filed at any time within five years of completion
  3. A lien must generally be recorded within the statutory period after furnishing labor or materials Correct answer.
  4. A lien requires the owner's written consent before recording

Explanation

Mechanic's lien rights are time-sensitive; Alaska law sets a deadline for recording a lien after the last furnishing of labor or materials, and missing it forfeits the right. The deadline is far shorter than five years.

Question 39Contracting Law and Regulations

Under Alaska law, a subcontractor who wishes to preserve lien rights on a private construction project should generally do which of the following?

  1. Obtain a bond from the general contractor
  2. Notify the owner in writing of the subcontractor's role and claim Correct answer.
  3. Record the subcontract with the recorder's office
  4. File suit before beginning work

Explanation

Alaska's lien statute includes notice requirements so owners are aware of parties furnishing labor or materials who may claim lien rights. Giving the required written notice preserves the subcontractor's ability to enforce a lien.

Question 40Contracting Law and Regulations

Alaska's prompt payment statute for construction contracts primarily addresses which issue?

  1. The interest rate on construction loans
  2. Timing of payments from owners to contractors and contractors to subcontractors Correct answer.
  3. The minimum wage for laborers
  4. The required retainage percentage on all projects

Explanation

Prompt payment laws set deadlines for paying invoices up the contracting chain and impose interest or penalties for late payment. They are aimed at cash flow, not lending rates, wages, or a universal retainage figure.

Question 41Contracting Law and Regulations

A contractor on an Alaska public works project withholds retainage. Which statement best reflects the purpose of retainage?

  1. It replaces the need for a performance bond
  2. It provides the owner leverage to ensure completion and correction of defects Correct answer.
  3. It funds the owner's construction contingency account
  4. It guarantees the contractor a profit margin

Explanation

Retainage is a percentage withheld from progress payments to give the owner security that the work will be completed and defects corrected. It is released per the contract and statutory terms once the work is accepted.

Question 42Contracting Law and Regulations

Which Alaska statute is most directly associated with protecting consumers in home improvement and repair transactions?

  1. The Alaska Uniform Commercial Code
  2. The Alaska Consumer Protection Act Correct answer.
  3. The Alaska Uniform Residential Landlord and Tenant Act
  4. The Alaska Workers' Compensation Act

Explanation

The Alaska Consumer Protection Act, together with home improvement regulations, addresses deceptive or unfair practices in consumer transactions including home repair. It provides remedies for homeowners harmed by unfair or deceptive conduct.

Question 43Contracting Law and Regulations

An Alaska contractor signs a contract containing a clause requiring all disputes to be resolved by binding arbitration. What is the general effect of such a clause?

  1. It is unenforceable in construction contracts
  2. It applies only to federal projects
  3. It requires disputes within its scope to be arbitrated rather than litigated Correct answer.
  4. It eliminates the contractor's lien rights

Explanation

Arbitration clauses are generally enforceable and require covered disputes to be resolved through arbitration instead of court litigation. The clause affects the forum for disputes but does not extinguish substantive rights such as liens.

Question 44Contracting Law and Regulations

A contractor and owner agree to a 'pay-when-paid' clause. Which statement best describes how such a clause generally operates?

  1. It bars the subcontractor from ever filing a lien
  2. It converts the contract into a cost-plus arrangement
  3. It guarantees the subcontractor payment within 30 days regardless of owner payment
  4. It makes the contractor's payment obligation contingent on receiving payment from the owner Correct answer.

Explanation

A pay-when-paid clause ties the timing of payment downstream to the contractor's receipt of payment from the owner. It is a timing mechanism, not an absolute bar to recovery or a change in the pricing structure.

Question 45Contracting Law and Regulations

Under Alaska law, which of the following is a common requirement for a construction contract to be enforceable against a homeowner for residential work above the statutory threshold?

  1. The contract must include a liquidated damages clause
  2. The contract must be recorded with the district recorder
  3. The contract must be approved by the state licensing board
  4. The contract must be signed by both parties and describe the work and price Correct answer.

Explanation

A compliant written home improvement contract identifies the parties, describes the work and materials, and states the price and payment terms, and it must be signed. Board approval and recording are not prerequisites to enforceability.

Question 46Contracting Law and Regulations

An Alaska contractor discovers that a competitor is operating without a license. What is the most appropriate regulatory response?

  1. Publish the competitor's name in a trade publication
  2. Report the unlicensed activity to the state licensing authority Correct answer.
  3. File a private lawsuit to revoke the competitor's license
  4. Do nothing, because licensing enforcement is discretionary and rare

Explanation

The state licensing authority investigates and enforces unlicensed contracting; reporting the activity is the proper channel. Private parties cannot revoke a license, and public shaming is not a regulatory remedy.

Question 47Contracting Law and Regulations

Alaska law requires contractors to maintain workers' compensation coverage for employees. Which statement best describes this obligation?

  1. Coverage is required only on public works projects
  2. Coverage may be replaced by a signed waiver from each employee
  3. Coverage is optional for employers with fewer than five employees
  4. Coverage is required for covered employees, and the contractor must obtain it or qualify for an exception Correct answer.

Explanation

Alaska's workers' compensation statute requires covered employers to secure coverage for their employees, subject to limited statutory exceptions. Employee waivers cannot substitute for required coverage.

Question 48Contracting Law and Regulations

An Alaska contractor is bidding on a state public works project. Which requirement is most likely to apply?

  1. The contractor must be licensed in another state as well
  2. The contractor must post a cash deposit equal to the bid
  3. The contractor must waive all lien rights
  4. The contractor must be prequalified or registered as required by the awarding agency Correct answer.

Explanation

State public works agencies commonly require bidders to be prequalified or registered to bid. Out-of-state licensing, cash bid deposits equal to the bid, and lien waivers are not standard universal requirements.

Question 49Contracting Law and Regulations

Alaska's preference provisions for state procurement may give an advantage to which of the following?

  1. Contractors who use only out-of-state labor
  2. Contractors located outside Alaska
  3. Contractors who waive retainage
  4. Alaska bidders or Alaska products under specified conditions Correct answer.

Explanation

Alaska procurement law includes preferences favoring Alaska bidders and Alaska products under defined conditions. These preferences are designed to support the local economy and are spelled out in statute and regulation.

Question 50Contracting Law and Regulations

A contractor signs a contract with a clause stating that time is of the essence. What does this clause generally mean?

  1. The owner must grant time extensions for weather
  2. The contract has no fixed completion date
  3. Failure to meet deadlines is a material breach Correct answer.
  4. The contractor may extend deadlines without penalty

Explanation

A time-is-of-the-essence clause makes the schedule a material term, so missing deadlines can be treated as a material breach. It strengthens the owner's remedies for delay and limits the contractor's ability to claim extra time without justification.