Question 1

When a developer decides to break down the project design into sequential phases and begins construction before the last phases of the design are complete, this procedure is more commonly referred to as

Accepted Answer

A)  build-to-suit construction 
B)  coordination construction 
C)  design-build construction 
D)  fast-track construction

Question 2

When construction costs exceed the amount of the construction loan, a developer may seek to cover the gap using mezzanine financing. All of the following statements regarding mezzanine debt are true EXCEPT:

Accepted Answer

A)  Mezzanine debt use is less expensive than normal construction financing 
B)  Mezzanine debt use avoids dilution of equity returns 
C)  Mezzanine debt use is less expensive than equity financing 
D)  Mezzanine debt use avoids the foreclosure process in the case of default

Question 3

Development involves a complex organization of many moving parts. Which of the following choices is often viewed as the single greatest cause of project delays and cost overruns?

Accepted Answer

A)  Obtaining permits 
B)  Financing 
C)  Effective communication between developer, architect, and engineer 
D)  Selecting the architect

Question 4

In considering the main components of a construction budget, which costs would be expected to constitute the largest portion of a development project's expense?

Accepted Answer

A)  Land costs 
B)  Hard construction costs 
C)  Soft construction costs 
D)  Marketing costs

Question 5

Suppose that a developer pre-leases space to a financially strong, national tenant such as Home Depot, without having yet built the structure in which they will be leasing space. This is more commonly referred to as a:

Accepted Answer

A)  ground lease 
B)  build-to-suit 
C)  design-build 
D)  contract for deed

Question 6

After construction has been completed, a developer may decide to seek additional financing. If current interest rates are relatively high, but the developer expects them to decline in the near future, the developer would most likely seek financing in the form of a:

Accepted Answer

A)  subordination agreement 
B)  miniperm loan 
C)  take-out commitment loan 
D)  floor loan

Question 7

A developer's selection of an architect is a vital step in the development process as the architect fulfills a number of important roles throughout the life of the project. As compensation for contributions in the design phase, the architect is often given a percentage of the construction cost. For moderately complex designs, the average compensation will be:

Accepted Answer

A)  1 to 2% 
B)  3 to 7% 
C)  7 to 10% 
D)  greater than 10%

Question 8

The construction budget has six main components: land costs, hard costs, construction soft costs, marketing soft costs, developer's fee, and total construction financing costs. Which of the following would be considered a hard cost?

Accepted Answer

A)  Carry costs 
B)  Costs of material for construction 
C)  Legal fees of the permitting process 
D)  Developer fees

Question 9

The developer will face a variety of costs throughout the project's life. Which of the following would be classified as a soft cost?

Accepted Answer

A)  Legal fees of the permitting process 
B)  Costs of materials 
C)  Labor cost of subcontractors for construction 
D)  Cost of land

Question 10

The expertise of several types of engineers must be coordinated by the architect in bringing together the final structure design. Which of the following types of engineers is responsible for specifications to achieve safety and stability for a structure's foundation?

Accepted Answer

A)  Soils engineer 
B)  Structural engineer 
C)  Mechanical engineer 
D)  Civil engineer

Question 11

The second stage of the development process requires an analysis of the project's feasibility. The developer will typically begin this stage of the development process with which of the following types of analysis?

Accepted Answer

A)  Financial feasibility 
B)  Environmental feasibility 
C)  Legal feasibility 
D)  Political feasibility

Question 12

Which of the following types of engineers is responsible for providing specifications and design for the HVAC system and other building systems?

Accepted Answer