02_Finances, Risks and Development

Question 1

Utilization Rate

Answer 1

firm’s overall efficiency and effectiveness. 60-65% for the firm and 75 - 85% including principals

Question 2

Overhead Rate

Answer 2

measure the cost of operations. the ratio of your total indirect expenses to your total direct labor cost.
firm’s profitability.1.3 - 1.5 typical.

Question 3

Net Multiplier

Answer 3

measure the revenue generated for every dollar spent on direct labor. net operating revenue (NOR) to total direct labor.

Question 4

Aged Accounts Receivable

Answer 4

annual average accounts receivable / (net operating revenue / 365 days

Question 5

Profit to Earnings (P/E) Ratio

Answer 5

measure the firms effectiveness in generating profit. . profit before distributions and taxes / net operating revenue. The P/E ratio indicates the firm’s effectiveness

Question 6

Net Revenue Per Employee

Answer 6

measures the revenue earnings for each employee. net operating revenue you are projecting for the coming year is realistic.

Question 7

Balance sheet

Answer 7

1. Solvency - measure firms ability to pay debt - Assets/liability. target min 1.5-1
2. Liquidity - measure the firms ability to covert assets into cash - all gains/ liability.
3. leverage - measure the firms ability to manage debt - liability/equity.
4. return on equity - money returned - NOR-expenses / total equity.

Question 8

Accounts Receivable

Answer 8

SD - 15%
DD - 20%
CD - 45%
Bid and negotiation - 5%
CA - 15%

Question 9

Business plan

Answer 9

location, specialization, something stable. what sets you apart, firm structure, Marketing

Question 10

Cash basis and Accrual basis

Answer 10

CB - PL Statement cash flow

AB - revenue earnings, 7 key financial performace indicators

Question 11

Quality assurance plan

Answer 11

Reduce, mitigate risk
Coordination policies
third party reviewer
use AIA Contracts
do not take risks that are stated in the contract
Code compliance is important

Question 12

Insurance Architecture firm

Answer 12

General liability - slips, falls
Professional liability - negligence
workers comp.
Automobile

Question 13

Mediation
Arbitration
Litigation

Answer 13

1st step, nonbinding
three panels, legally binding, industry people
court, sue,

Question 14

Liens

Answer 14

protecting the little guy,

Question 15

running a firm

Answer 15

project delivery type
client
economic climate
market climate
scope
Resources