Contracting Flashcards by Azeneth Avalos

Which of the following statements is the most correct?
A. All advertising must include the contractors name, address and telephone number.
B. The address of the CSLB must be on all advertising.
C. A contractor must have a license number to advertise.
D. A contractors license number must be on all forms the company prints.

C. A contractor must have a license number to advertise.

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What must licensed plumbing, electrical sign , and well drilling contractors have displayed on both sides of their commercial truck ?
A. Name, business address, phone number, and license number.
B. Name, business address, and license number
C. Name and license number only.
D. Nothing

B. Name, business address, and license number

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The most Important thing to include when advertising for construction work is:

A. The company’s complete name style
B. A list of all the owners of the company
C. The contractor’s license number
D. The company’s address

C. The contractors license number

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What color paint is usually used to mark an excavation area?
A. Red
B. Green
C. White.
D. Brown

C. White

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If you are advertising, in which of these locations is your license number required?

A. Billboards
B. Bus stop benches
C. Yellow page advertising
D. All of the above

D. All of the above

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If, during excavation, you unearth human remains or burial artifacts at a construction site, what should you do ?
A. Notify the owner of the property.
B. Stop work and place a warning ribbon three feet from the remains, around the perimeter of the site.
C. Stop work immediately at the site.
D. Stop work immediately at the site; and notify the coroner.

D. Stop work immediately at the site; and notify the coroner.

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Which of the following would you NOT include in a bid?
A. Cost of performance bond
B. Labor and material.
C. Profit
D. Anticipated legal fees

D. Anticipated legal fees

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Of the following four items to consider when bidding, which is the MOST important?

A. Overhead
B. Labor
C. Material
D. Profit

D. Profit

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What is the best reason for standardized bidding?
A. Assures the accuracy of cost estimates
B. Allows you to always make a profit
C. Saves your bookkeeper time and money.
D. Allows the company to grow.

A. Assures the accuracy of cost estimates

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Which of the following would most likely place a bid out of range from other bids submitted for a job ?
A. Overhead under 15%
B. Profit above 10%
C. Labor above 10%
D. Overhead and profit above 10%

B. Profit above 10%

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When bidding on a home improvement contract, a contractor should include: material costs, labor costs, direct costs, permits, profit and…

A. Repairs
B. Office expenses
C.Overhead costs
D. None of the above

C. overhead costs

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What is a common pitfall in bidding?
A. Bidding on a project that is not completely understood.
B. Bidding against the competition and not the job.
C. Bidding a job without inspecting the jobsite.
D. All the above.

B. Bidding against the competition and not the job.

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Your big on a job was accepted, but you inadvertently left out a part of that job, what should you do?

A. Write and change order and get it signed by the owner
B. Add the additional cost to the end of the job and say nothing
C. Do the omitted portion of the job on a time and materials basis
D. The contractor is responsible to complete the work

D. The contractor is responsible to complete the work

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A contractor is bidding on a project for a homeowner. The homeowner has included several extra items upon which to bid. After receiving the bid, the homeowner says it is too high and asks the contractor to lower the price. What should the contractor do?
A. Decline the work.
B. Negotiate with the owner to reduce the scope of work.
C. Lower the bid cost and hope to recover the overhead later.
D. Lower the bid and overhead only, no profit.

Negotiate with the owner to reduce the scope of work.

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What is not recommended if you are outbid by a lower bidder?

A. Lower your bid to match other offers
B. Withdraw your bid
C. Stand firm with your bid
D. Negotiate with the owner in hopes of getting the contract

A. Lower your bid to match other offers

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A customer wants to accept a bid but does not have enough money. A wise contract decision would be to:

A. Eliminate the profit and take the job for overhead
B. Match the lowest bid of another contractor
C. Do the job at cost
D. Stick close to your bid even if it means losing the job

D. Stick close to your bid even if it means losing the job

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When bidding on a job, what is the best way to assess a job?
A. Call the planning department.
B. Call the architect
C. Call the owner
D. Inspect the job personally

D. Inspect the job personally

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If a contractor has a written contract based on time and material, what should be done to cover an increase in overhead costs?
A. Add the cost to the customer’s bill under material
B. Add the cost to the customer’s bill under labor
C. Time and material contracts are inappropriate
D. There is nothing they can do to recover the additional costs

D. There is nothing they can do to recover the additional costs

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If direct costs are $37,000 and overhead is 12% and profit is 5%, what is the selling price?

А. $39,272.47
B. $41,373.45
C. $43,383.37
D.$44,578.31

D.$44,578.31

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After your bid for a public-works job has been accepted by the awarding authority, you recognize that you incorrectly listed one of your subcontractors. To correct your error what should you do?
A You are not allowed to change subcontractors once your bid has been submittea
B. Pay a 10% penalty and then make the necessary changes
C.Notify the awarding authority and request permission to make the necessary changes due to your clerical error
D. Submit a new bid

C.Notify the awarding authority and request permission to make the necessary changes due to your clerical error

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C.Notify the awarding authority and request permission to make the necessary changes due to your clerical error

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If a general contractor fails to pay a subcontractor and the general files for bankruptcy:
A The sub will recover all funds
B. The sub cannot recover in the case of a bankruptcy
C. The sub would probably be awarded a portion of his claim
D. A general contractor cannot file for bankruptcy

C. The sub would probably be awarded a portion of his claim

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C. The sub would probably be awarded a portion of his claim

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You realize after completion of a job that one of your subcontractors performed poor workmanship. Who is responsible? A The subcontractor B. The prime contractor C. The architect D. All of the above

B. The prime contractor

How can contractors best control their job costs? A By spending less time supervising on the job B By hiring inexperienced employees who will work for less money C.By working on several jobs simultaneously D By properly coordinating all job activities

D By properly coordinating all job activities

What is the best way to monitor labor costs? A Figure the hours from detailed time cards B. Compare previous labor costs C. Ask crew supervisors D. Check the profit and loss statement

A Figure the hours from detailed time cards

When you lose money on a job, what is the best way to determine the source of the problem? A Compare job cost records to the budget B Analyze payroll record C Balancing the cash worksheet D Review payment schedules in contracts

A Compare job cost records to the budget

What is the benefit of using job cost cards? A They are inexpensive B They are convenient for your bookkeeper and save time C They save time andexpenses D They are a means to keep accurate cost records for future bidding

D They are a means to keep accurate cost records for future bidding

Select the best procedure when ordering materials for a job that is in progress. A Review the original bid as well as the plans B. Walk the job site C. Verify your order with the homeowner D. Consult with the job supervisor before ordering

D. Consult with the job supervisor before ordering

When is the best time to order materials? A After visiting the job site B Order material only as needed C After going over the plans and specs D When you sign the contract

C After going over the plans and specs

Large inventories should be maintained: A Because of discounts that are available B To meet all short-term increases in demand C. In case of supply shortages D. Never

D. Never

What is the best way to know what inventory you have? A Go over your orders B Call the superintendent and have it checked C. Read the list of what's on hand D. Physically walk and check it yourself

B Call the superintendent and have it checked

What should a contractor do, if the supplier he is purchasing material from, experiences a strike of its employees? A contact the owner immediately B. Contact the architect immediately C. Contact the general building contractor immediately D. Continue the work as usual

A. contact the owner immediately

When dealing with suppliers, how do you open an account and establish a line of credit? A Obtain a credit card and use it as much as possible B. Get an approval form from the bank C.Sign a note that you will pay your bill monthly D. It is best to use cash instead of credit

C.Sign a note that you will pay your bill monthly

A contractor has a credit line established with a supplier. Select the most correct statement: A The supplier can record a lien against the contractor's equipment B. The supplier can force the contractor to pay by offering discounts based on future purchases C. The credit line was established based on the contractor's repayment history, or his reputation for paying debts when due D. Credit lines are wise to have

C. The credit line was established based on the contractor's repayment history, or his reputation for paying debts when due

The owner calls a contractor to fix a door that fell. The contractor agrees to re-hang the door. After the contractor places the door, the owner then asks the contractor to paint out the scratches on the door made by the owner's dog. What should the contractor do? A Do as the owner asks B Prepare a change order C Refuse and quit the job altogether D.None of the above

B. Prepare a change order

Which of the following is considered the most effective means to avoid a problem with your customer regarding change orders during the course of construction? A All work should stop if a change order is disputed B Communicate frequently with your customer during the course of construction C.Contact the architect before making any changes D Perform the contract first, then write a new one, and only then, perform the changes

B Communicate frequently with your customer during the course of construction

An owner makes numerous changes during the course of a job. With that in mind, the contractor should: A Charge administrative fees B. Collect change order costs as he goes C. Not proceed until the client has signed each change order D. All of the above

A. Charge administrative fees

Which of the following is the least effective way to handle change orders? A All changes must be in written form B Have a clear and concise original written agreement C Bill the customer for changes only after the entire job is completed D All of the above

C Bill the customer for changes only after the entire job is completed

Why should a contractor keep a copy of a change order? A In case a problem occurs later B. You need it in order to record a lien C. You need it for tax purposes D. You need not keep the change order, only the contract must be preserved

A In case a problem occurs later

Where do you attach a change order? A. To the contract B. To the progress report C. With the plans & specs D. With the county

A. To the contract

Where do you attach a change order? A. To the contract B. To the progress report C. With the plans & specs D. With the county

A. To the contract

If customers have an excessive amount of change orders, how can you limit customers from having an excessive amount of change orders? A Limiting the number of change orders in the contract fine print B Charge the customer an administrative fee for each change order up front C Write up a separate agreement that gives the contractor the final say whether the change is made D. Arrange for the owner to put funds into an escrow account or funding control company that will insure payment for each change order that is properly executed

D. Arrange for the owner to put funds into an escrow account or funding control company that will insure payment for each change order that is properly executed

Which of the following should be part of a change order? A The start date B The revised list of costs C The increased profit percentage D. The name of any new subcontractor

B The revised list of costs

Which of the following statements best describes the correct practice when making amendments to an existing contract? A As a contractor, you cannot make any change to an existing contract without the owner's approval and/or signature B At the end of the project, invoice your customer after the project is complete C Write to your customer and indicate the changes you are making and what the cost will be D The owner's signature is not required if the owner orally tells you to make the change

A As a contractor, you cannot make any change to an existing contract without the owner's approval and/or signature

When you get an approved set of plans for the building department, what should you do first? A Order all your materials B. Read any notes C. Hire employees D. Bid the job

B. Read any notes

When you get an approved set of plans for the building department, what should you do first? A Order all your materials B. Read any notes C. Hire employees D. Bid the job

B. Read any notes

Of the following, which would be the next step after an engineer hands you a set of approved plans? A Build the building B. Obtain construction funds C. Re-check the plans D. Have the owner sign the plans

C. Re-check the plans

Who is responsible if an employee installs a cabinet that falls and damages the countertop? A . Employee B. Contractor C. Bonding company D. Owner

B. Contractor

Work on a job ended two years ago. The owner, Mr. Jones, notices some problems. Who should he contact? A The Building & Safety department B The prime contractor C. The subcontractor D. No warranty will cover a defect 2 years aftercompletion

B The prime contractor

Mr. Lopez, an electrical contractor, did a job for Mr. Garcia, the prime contractor. In the course of his work, Mr. Lopez mistakenly tore a hole in the wall that was not necessary. The customer did not notice the hole until the job was done. The contractors were paid and had left the premises. Who is liable to correct the damage? A The customer, because the hole should have been reported before the job was completed and the contractors left B. The subcontractor who made the hole C The prime contractor D. No one, as the damage was not intentional

C The prime contractor

An owner complains about workmanship on a completed project which is not critical to the timely completion of the whole project. Unfortunately, you are in the middle of that part of the project which is critical to the timely completion of all the phases. The complaint is a reasonable one which will require corrections. Which is the best response? A Immediately stop all work on the critical phase to make the correction B Ignore the complaint until the critical phase is complete C Hire additional workers to make the corrections immediately D Tell the owner the complaint is valid and corrections will be made after the critical phase is completed.

D Tell the owner the complaint is valid and corrections will be made after the critical phase is completed.

What should you do if a client is unhappy with your work? A Keep working and leave the client alone to cool-off B. Continue working and worry about the client at the end of the job C. Ignore the client until after the work is done D. Handle the problem in a timely manner when it comes up

D. Handle the problem in a timely manner when it comes up

You are working a job and you realize that the plans and specifications violate the applicable local codes. You are at a critical stage of the job. Select the best form of action that you should take? A Abandon the job B. Cease work immediately until the plans and specs are brought up to code C. Inform the architect D. Complete the critical stage of the project, and contact the inspector and the architect

B. Cease work immediately until the plans and specs are brought up to code

A customer cannot pay for the work you performed. What should you do ? A Turn the customer over to a collection agency B. Offer the customer an extension until they can pay you C. Contact the Contractors State License Board D. Forget about it

B. Offer the customer an extension until they can pay you

A customer says that you have failed to complete the remodeling job in a satisfactory manner and refuses to pay. If an arbitration clause does not appear in the original contract, then: A The customer can be forced to arbitrate rather than go to court B. The only way to arbitrate is for both parties to agree to arbitrate C. You may represent yourself at the hearing D. There is nothing you can do

B. The only way to arbitrate is for both parties to agree to arbitrate

The significance of retentions is: A Important because retention usually exceeds profit B. Important because profit exceeds retention C. Not important because profit exceeds retention D. Not important because retention usually exceeds profit

A Important because retention usually exceeds profit

If retention is withheld until substantial completion of the entire job, the subs that worked on the early stages of the project can be put at a financial disadvantage. What is the best way to remedy this situation? A Tie the release of proportional retentions to the completion of the sub's work rather than the entire job B Pay the subs when they finish, no matter what C. Contact the owner immediately D. None of the above

A Tie the release of proportional retentions to the completion of the sub's work rather than the entire job

In most construction contracts, the retention may be held up for___days as a guarantee that the prime pays the subcontractors and suppliers. A 10 B. 30 C.60 D. 90

C . 60

In most construction contracts, the retention may be held up for___days as a guarantee that the prime pays the subcontractors and suppliers. A 10 B. 30 C.60 D. 90

C . 60

It is quite common in the construction industry for an owner to withhold a percentage of the total payments due a contractor to insure the contractor completes the job and pays his subcontractors and suppliers. Retentions are normally paid: A After the prime lender has been notified of completion B. Upon completion and expiration of the lienperiod C. After a third of the work has been completed D. After the contractor signs a waiver of his lien

B. Upon completion and expiration of the lienperiod

The problem of retentions is greater for: A Subcontractors who complete their work early in the project B. Subcontractors who complete their work late in the project C. All contractors in all cases D. Original contractors only

A Subcontractors who complete their work early in the project

Before you initiate the inspection process with the building department, you should: A Clean the job site B.Pay all subs C. Inspect the job D. Inform the owner

A Clean the job site

A contractor constructs a building exactly per approved plans only to find out during inspection, the structure does not meet the code, due to an error by the Building & Safety Department. Who is liable? A Architect/Engineer B. Contractor C. Building & Safety Department D. Owner

A Architect/Engineer

All work on a project has been completed. A copy of the final inspection report is given to whom? A The City Planning Department B. The City Building Department C. The County Assessor D. The Department of Building & Safety

C. The County Assessor

Select the best means to check to see that all phases of a job have been performed? A The contract B The subcontracts and the contract C.A punch list D. The plans and specifications

C.A punch list

Prior to calling for a final inspection, a contractor should walk through the project with the owner and use a punch list to insure: A The work meets with the codes of the County B The owner is satisfied C. The work is complete D. Both B and C

D. Both B and C

Which of the following is the best means to insure that funds are readily available for a job? A Check your balance sheet B. Check your ledgers and journals C. Check for cost overruns D. Check both the balance sheet and income statement

C. Check for cost overruns

Who would be responsible for cost over-runs on a job that the owner agreed to, but did not sign an additional contract for the cost over-runs amounting to $2500? A Since the amount was under $3000, the owner would be responsible B. The contractor would be responsible C. Since the owner did not sign, the owner would be responsible D. No one is responsible

B. The contractor would be responsible

When purchasing insurance, what is the best way to choose the right company? A Referral B. The credit rating of the company, then the cost C. Location of the company D. Word of mouth

B. The credit rating of the company, then the cost

A "builder's risk insurance" policy would cover: A A contractor's tools B. A contractor's equipment C. An injury sustained by a worker on the job site D. Hail storm damage

D. Hail storm damage

Which of the following is NOT covered by a standard contractor's insurance policy? A Employee's tools B. Employers' tools C. Damage from fire, storm, theft, and vandalism D. Job materials

A. Employee's tools

A contractor is looking for an insurance policy to cover the high degree of exposure to risk. Of the following, which insurance policy would be best for this purpose? A Property B. General liability C. Builder's risk D.Umbrella

D.Umbrella

The taxes for businesses are calculated: A Depending on the size of the business B. Depending on the organizational structure C. The same for large businesses & corporations D. The same for all businesses

B. Depending on the organizational structure

On what are contractor's income taxes based? A Losses B Cost of materials C Net profit D Gross profit

C. Net profit

If John, a prime contractor, fails to obtain a building permit prior to starting a job, he is subject to: A Suspension of his contractor's license B.Double the permit fee C.Fine of $1000 D.Both A & B

D.Both A & B

Whose signature must appear on an application for a building permit? A Contractor B. Owner C. Owner and contractor D. Architect

A. Contractor

What agency can give you direction and information pertaining to local building codes and regulations? A The local office of the Registrar BThe State Architect C.The issuing department or agency D.The City Clerk

C.The issuing department or agency

Which of the following BEST describes the function of the Building Standards Code? A It sets forth virtually all requirements, with little local adaptation allowed B It establishes stable standards that will remain the same for years C. It sets forth requirements while allowing for adaptation for local authorities D It serves as a resource for local authorities to determine which codes are enforceable.

C. It sets forth requirements while allowing for adaptation for local authorities

Which building code should a contractor follow? A The most stringent B The national code C The state code D The local code

D. The local code