What L6M5 Questions and Answers feature?

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Project 1 - Full Turnkey & Top-down Pricing

The project is a full turnkey contract because XYZ is responsible for both design and construction, and ownership is transferred to the client upon completion.

The pricing mechanism is top-down, as it is determined based on past experience of similar projects.

Project 2 - Design and Operate & Rolling Pricing

This is a design and operate contract since XYZ is managing the facility for 6 years after construction.

The rolling pricing mechanism applies because the budget changes continuously over the years due to industry volatility.

Project 3 - Management Contracting & Zero Pricing

Management contracting applies because XYZ was involved early but does not carry design risk.

The pricing mechanism is zero, meaning the budget resets at the beginning of each new accounting period.

Project 4 - Partial Turnkey & Activity-Based Pricing

This is a partial turnkey contract because XYZ is responsible for only certain aspects of the design and build, while another contractor is also involved.

Activity-based pricing is used since XYZ is paid upon milestone completion.

Project 5 - Design Build Operate and Ownership & Bottom-up Pricing

This project follows a Design Build Operate and Ownership (DBOO) model because XYZ is responsible for construction and will operate the toll bridge for 6 years before transferring full control.

The pricing is bottom-up, as it includes raw materials, labor costs, and a profit margin.

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Company 1 - Power Culture & Control System

The founder has centralised power, meaning this is a Power Culture.

The Control System is strong due to the strict financial management and reward structure.

Company 2 - Person Culture & Symbols

Employees work independently and focus on their own clients, indicating a Person Culture.

The Symbols aspect comes from the strong corporate branding and identity.

Company 3 - Role Culture & Organisation Structure

A Role Culture is present due to the strict hierarchy and bureaucracy.

The Organisation Structure influences this, as it determines salary and responsibilities.

Company 4 - Task Culture & Ritual

The focus on small teams and dynamic work assignments suggests a Task Culture.

The weekly meetings reflect an important ritual in the company’s culture.

Company 5 - Power Culture & Stories

Power is concentrated in senior leadership, making this a Power Culture.

The company culture is reinforced through Stories of past successes.

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Project 1 - NEC & Target Costing

NEC (New Engineering Contract) is used in public sector projects because of its flexibility and collaborative nature.

The Target Costing pricing mechanism is used, as cost savings are shared between the client and the contractor.

Project 2 - FIDIC & Fixed Lump Sum

FIDIC (Fédération Internationale des Ingénieurs-Conseils) is known as the "Rainbow Suite", which is rigid and does not allow changes.

The Fixed Lump Sum pricing mechanism applies since the price was set at contract signing.

Project 3 - Joint Venture Contract & Bill of Quantities

Joint Venture Contracts are commonly used in international construction projects, such as wind turbine projects.

Bill of Quantities pricing applies since the cost is calculated per unit (each wind turbine).

Project 4 - JCT & Cost Reimbursable

JCT (Joint Contracts Tribunal) is the most popular contract type in the construction industry, and it includes a Contract Administrator.

The Cost Reimbursable pricing mechanism is used because costs are shared plus a profit margin.

Project 5 - IMechE & Activity-Based Pricing

IMechE (Institution of Mechanical Engineers) is used for ICT and engineering-related projects.

Activity-Based Pricing applies because payments are milestone-based.