ARE 5.0: PcM_2_Finance, Rish, & Development of Practice Flashcards
What is an overhead rate?
This ratio of total office overhead to total direct labor determines this measure of financial
strength of an office.
What are the two types of accounting used in an architecture firm?
General ledger and project cost are used for this purpose in an architecture firm.
Balance sheets are used to show what elements of the financial condition
of a firm?
These are summaries of all assets and liabilities in an office.
What are the other names for professional liability insurance?
The terms malpractice insurance and errors and omissions are often substituted for this type of
insurance.
What are the implied duties of an architect?
These are the elements of what kind of duties of an architect.
- cooperating with contractors
- assisting the owner in coordinating the work
- not interfering with the contractor’s work
- giving relevant information to contractors
What are the four steps to making sure the firm’s accounts receivable are being paid in a timely manner?
Contract terms, timely billing, complete invoices, and regular procedures for tracking accounts are the four things that are required for this important office function.
If a firm pays an employee $50.00 per hour and the net multiplier of that firm is 3, what is the billing rate for that employee?
A billing rate of $150.00 would be determined by what combination of figures if the employee is paid $50.00 per hour.
What, if any, insurance is the owner obligated to have according to the
America Institute of Architects Document A201, General Conditions of the Contract for Construction?
These are the insurances that must be held by what party according to the AIA Document A201, General Conditions of the Contract for Construction.
- liability insurance
- property insurance
- boiler and machinery insurance
What are the three commonly used, viable defenses when an architect is sued for liability and/or negligence?
The three commonly used defenses for liability and/or negligence by an architect are
- betterment
- statue of limitation
- statue of repose
The owner of an architecture firm might manage firm overhead by controlling what specific costs?
These costs are commonly used to control what aspect of the financial health of a firm.
- non-billable labor
- non-labor direct expenses
- outsourced expenses
- postage and delivery
- local travel expenses
- presentation materials
What does it imply if a firm is carrying a bill for longer that 90 days?
The firm is effectively loaning money interest-free if this is happening.
What is the accounting term for a bill to the firm for office supplies?
A bill for office supplies is a liability in this part of the firm’s accounting.
What does the net profit before tax include?
Total annual revenue minus consultant fees and reimbursable expenses are part of this number.
What is the concept of privity?
As defined in the American Institute of Architects Document A201, General Conditions of the
Contract for Construction, this is the term that holds architects harmless from claims by parties with whom they have no direct contract.
Risk Management in a firm includes several items; which one relates to the client?
Simply knowing the client (or their reputation) avoids many problems related to this area of risk management.
