PCM Mix 2 Flashcards
What is ROO>
Using ROO (return on overhead) can provide a measurement of accountability for an office. Return on overhead is calculated by dividing the profits contributed by a branch office by the amount of overhead expense incurred at that office.
What are two key components of Financial Management for professional design firms?
The Annual Budget and Profit Plan.
These two reports are closely related and should be developed concurrently.
What is the accounting process that is the simplest and the one you most likely use if you are a sole proprietorship?
Cash Basis-Reporting
The accounting process for most sole proprietors without any paid staff would be on a dollars received vs. dollars paid accounting or checkbook system and therefore would likely use cash-basis reporting
Would the revenue factor be higher or lower if the firm is more productive?
Higher
The higher the revenue factor, the better a firm is at earning more revenue with less labor.
Increasing the standard of care increases what?
…..the architects liability exposure.
In order to properly forecast profit with a Profit Plan, you must first have what?
a Labor budget.
This would be found on your professional liability insurance application but not on other insurance applications like general liability or property insurance:
Warranty Statement,
which is usually: (1) Have any claims been made against you in the prior ten years? and (2) Do previous employers, partners, principals or colleagues have knowledge of any error, act, omission, situation, etc. that is the basis for a claim under the desired policy?
What are examples of “Derivative Work” from an architect?
photograph,
painting,
or other representation of either the design drawings or the building itself
What are some characteristics about a professional Limited Liability Corporation (LLC)?
The professional limited liability partnership is a partnership structure typically for licensed Architects.
The partners are usually liable for their own professional negligence.
Profits and losses are passed through to the Owners
There are no shareholders or managers.
Most states require minimum professional liability insurance for this type of business structure.
Under IRS rules, what business structure may report as a sole proprietorship (one member, the Owner), or a partnership or a corporation?
Limited Liability Corporation (LLC)
What us Loss of Use Insurance and who is covered by it?
Loss of use insurance is held by the Owner. It covers any financial loss suffered by the Owner due to delays in construction from construction damage, accidents, fire, explosions or other hazards that might prevent the project from opening on time.
FLSA is what?
Fair Labor Standards Act
Deals with: Minimum wage Overtime Hours Worked Recordkeeping Child Labor
Two options instead of using the title “Intern” are what?
“architectural associate” and
“design professional.”
According to the AIA website, while “intern” is still a supported title for students working in an architectural office while pursuing an architecture degree, it should not apply to those who have already earned an NAAB-accredited degree and are currently working for a firm while pursuing licensure.
What is “and admitted carrier” in terms of Professional Liability Insurance mean?
An admitted carrier is an insurance company licensed and authorized to do business in a specific state and subject to regulation by the state insurance commissioner.
Which type of coverage would you recommend if supporting the intent of the AIA as it relates to “Builders Risk insurance”?
ALL RISK
According to AIA Contract Document A201, the Owner should reduce exposure to risk by ensuring what in regards to materials that they purchase and store off-site or that are in transit?
Property Insurance
According to AIA 201, the Owner should carry property insurance that covers materials purchased and stored off-site or in transit.
ADEA
The Age Discrimination in Employment Act
defines “employer” to include every individual, partnership, association, labor organization, corporation, business trust, legal representative or organized group of persons who is engaged in an industry affecting commerce and has:
20 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Confirm your state’s laws.
According to the International Residential Code, where there is a conflict between a general requirement and a specific requirement, which shall be applicable?
SPECIFIC
not most restrictive in this case
According to the International Residential Code (R104.9.1), used materials, equipment and devices shall not be reused unless approved by who?
THE BUILDING OFFICIAL
According to the International Residential Code (R109.1), name an inspection not included :
Energy Efficiency Inspection
What is a MASTER-SERVANT relationship in legal terms?
describes the amount of control that a principal has over an agent. Determining if a master-servant relationship exists is an important consideration when addressing a business’s legal issues and disputes.
You’re managing a complex design project that will have multiple phases and numerous tasks. Which type of schedule would be most appropriate?
Critical Path (CPM)
Resource utilization or management would include which of the following functions as they relate to the practice of architecture?
Bids
Proposals
Use of Capitol and human resources
Financial Models
What is a Mattox Format?
The Mattox format is an easier way to analyze a firm’s key financial performance indicators. Using the Profit-Loss Statement, the Mattox format includes four major components: revenue, direct labor, indirect expenses, and miscellaneous revenue and expenses.
What are three other things you should look for in a Design Contract after Scope, Timeline, and Fees are all clearly defined?
a clause that limits liability,
provision for indemnification
and mutual waiver of consequential damages
……should all be included in Design Contracts.
Typically, what is required for documents to be admitted into evidence under the business records exception to the hearsay rule?
Produced at the time of incident
Made during the regular course of business
When selecting a professional liability policy, it is important to consider what?
coverage limits, exclusions, cost, deductibles, endorsement options, and overall policy
In regards to copyright protection for architecture, which of the following are covered by the AWCPA?
Churches
Gazebos
Houses
Office Buildings
“Buildings” are defined as “humanly habitable structures that are intended to be both permanent and stationary, such as houses and office buildings, and other permanent and stationary structures designed for human occupancy, including but not limited to churches, museums, gazebos, and garden pavilions.” Specifically prohibited from protection are “structures other than buildings, such as bridges, cloverleafs, dams, walkways, tents, recreational vehicles, mobile homes, and boats.”
As described in The Architect’s Guide to Small Firm Practice (Wiley, 2010) by Rena M. Klein, FAIA, design firms can typically organize their Business Plans around four major elements, which include:
purpose,
financial planning,
operational planning,
and marketing planning.
These types of legal business structures must file with the Secretary of State…
Limited liability partnerships
and all corporate structures.
An agent’s fiduciary duties to a principal include:
(1) Care: The agent must use all of their skills to the best of their ability on behalf of the client,
(2) Loyalty: The agent owes undivided loyalty to the client and puts the client’s interests above her own,
(3) Obedience: The agent must obey all lawful orders that the client gives, and
(4) Notification: The agent must disclose to the client any information received that may benefit the client’s position in a negotiation.
According to the International Residential Code (R105.5), every permit issued shall become invalid unless the authorized Work is started within how many days?
180
6 months
The financial statement that reports the revenues and expenses for a period of time is the…..
Income Statement
AIA E202
BIM Protocol Exhibit establishes the protocols and expected level of development and assigns responsibility of each model element.
What are Sunk Costs?
….costs that are incurred and cannot be recovered. Training is an internal cost.
Budget Analysis provides what?
…an overview of profitability for an architectural firm.
Standard Cost Analysis provides what?
….shows details of variances of profitability for an architectural firm.
What is a backlog?
a buildup of work that has yet to be completed or invoiced.
Which KPI measures the revenue generated for every dollar spent on direct labor?
Net multiplier
For profit to be realized, it must be greater than the break-even rate. The industry benchmark is 3.0+.
What is a KPI?
Key Performance Indicator
Uncertain or potential obligations that may or may not give rise to an actual liability (for example, a lawsuit) are called what?
Contingent Liabilities
Prepayments by customers should be reported as what in your accounting books?
current liability entitled unearned revenue
Final payment represents a waiver of all claims by the Owner except for what?
….unsettled liens, claims or encumbrances arising out of the initial contract.
A firms General Ledger includes what?
the asset accounts such as cash, accounts receivable, inventory, investments, land, and equipment. Examples of the general ledger liability accounts include notes payable, accounts payable and customer deposits.
10 Key Performance Indicators are:
utilization rate, overhead rate, break-even rate, net multiplier, aged accounts receivable, profit-to-earnings ratio, net revenue per employee, cash flow, proposals pending, and backlog volume
How Long does the architect have to review Contractor Submittals?
In regards to the Contractor’s submittals, AIA A201: General Conditions provides that the Architect’s review will be done with such reasonable promptness as to cause no delay in the Work or in the activities of the Owner, Contractor or separate Contractors, while allowing sufficient time in the Architect’s professional judgment to permit adequate review.
AIA A-102
AIA A102 is the Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price.
If you need to write off bad debt, you will be required to use which accounting method?
Accrual method
Which process might include a rigorous Post Occupancy Evaluation in order to make subsequent projects more successful
Evidence Based Design
Exploring possibilities and constraints of inherited situations by applying critical thinking through qualitative and quantitative research methods, creating new understanding toward better design solutions, defines which design method?
Divergence
Divergent thinking is the ability to offer different, unique or variant ideas adherent to one theme, exploring possibilities and constraints of inherited situations.
In regards to federal labor laws, why is the number 15 important when considering employees that work for a firm?
…..this is when federal laws, Title VII (anti-discrimination on the basis of race, color, national origin, sex or religion), ADA (Americans with Disabilities Act), and GINA (Genetic Information Nondiscrimination Act) all kick in.
What is a CDFA?
Certified design firm administrator
What is Erisa?
Employment Retirement Income Security Act
Examples of “pass through” business structures:
S-Corp
Sole Proprietorship
Partnership
LLC
Which business structures would allow you to operate your business without an EIN for tax purposes?
Sole proprietorship, no employees
EIN-Employer Identification Number- for IRS purposes
LLP
The professional limited liability partnership is a partnership structure typically for licensed Architects. The partners are usually liable for their own professional negligence. Profits and losses are passed through to the Owners and there are no shareholders or managers. Most states require minimum professional liability insurance for this type of business structure.
Loss of Use Insurance
…..held by the Owner. It covers any financial loss suffered by the Owner due to delays in construction from construction damage, accidents, fire, explosions or other hazards that might prevent the project from opening on time.
Resource utilization or management would include which functions as they relate to the practice of architecture?
proposals,
bids,
financial models,
and the use of capital and human resources
