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PCM > PCM_Module 2 > Flashcards

PCM_Module 2 Flashcards

1
Q

What are usually the two largest expenses as a business?

A

Office rent and employee payroll

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2
Q

What is an issue that can create cash flow issues?

A

Not getting invoices out in time for the client is late on payment

Staff is late on filing their timesheets

Contract requires payment in a lump sum at the end of the project or contract is a fixed fee and the time spent on the project was underestimates

Client puts the project “on hold”

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3
Q

Amount in a line of credit that a firm should have handy to cover expenses

A

a month’s worth of expenses

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4
Q

The most important document in tracking the health of a business is what?

A

balance sheet

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5
Q

Who/what generates the profit-loss statement (P&L)

A

The accountant/accounting software calculates how much money came in (revenue) and how much went out (expenses)

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6
Q

In order to ensure next month’s expenses are covered, a business owner should ensure the staff is producing enough ________ to produce the necessary revenue

A

Billable hours

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7
Q

What is the reason for using a multiplier for determining a staff’s billable rate?

A

It ensures you have enough money to pay the staff and cover overhead and produce profit

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8
Q

What is the typical fee structure for a project?

A

Set maximum price per each stage of the work that is billed hourly up to a maximum amount, or billed by percentage complete

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9
Q

What is a fee structure that is rarely used for a project?

A

a project billed hourly with no maximum

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10
Q

what is an example of a “reimbursable”?

A

Plotting, photocopying or faxes

Long distance phone calls

car travel, billed by the mile, to the project site

travel expenses for the project, including airfare or hotel

courier, shipping and postage

meals, parking or rental cars related to trips for the project

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11
Q

who is responsible to pay the “reimbursable expenses”?

A

as spelled out in the owner-architect agreement, the owner must pay these and the architect can charge overhead on it as well

the owner pays these, if the architect had to pay these it would take away from the profitability and would incentivize the architect to spend less on the project and therefore the quality of the work might suffer

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12
Q

how do you determine the “gross profit” on a profit & loss statement?

A

subtract the expenses from the income, a healthy profit margin should be around 20%

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13
Q

With a maintained healthy profit margin, what could a financially strong firm take on after a few years of consistent workload?

A

Hire new staff

Build out a new office

Experiment with a reduced fee on a new type of project

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14
Q

A profit loss statement helps to track what?

A

Utilization rates by employees

overhead rate

break-even rate

net multiplier

profit margin

new revenue per employee

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15
Q

how is a balance statement different from a profit & loss statement?

A

a profit & loss statement compares income to expenses, and the balance statement tells the story behind those numbers

the balance statement defines assets, liabilities and capital at a particular point in time

the balance statement will define the difference between current liabilities (things due this year) and long term liabilities

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16
Q

Assets

A

any valuable property that is owned by the firm, such as real estate or vehicles

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17
Q

Liabilites

A

any debt or financial obligations related to the business that need to be paid

this can be credit cards, business loans, car leases or even future stock options offered to staff

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18
Q

Capital

A

the financial assets needed to run the company operations

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19
Q

cash-on-hand

A

the total amount of an accessible cash, also referred to as liquidity, this includes things that can be sold quickly like stocks

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20
Q

accounts receivable

A

the money that is owed to a company by its clients, whether they have been invoiced yet or not

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21
Q

accounts payable

A

the money that a company owes to its creditors, such as rent, leases, loans or credit cards

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22
Q

Equity

A

the ownership interests of a firm, including the percentage of ownership of each principal of the firm

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23
Q

firms need to keep a close eye on what two business items, even if they are too busy?

A

sending out invoices in a timely manner and watch the amount of expenses spent

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24
Q

why is it important to educate employees on a firm’s values and goals?

A

overall, a knowledge of an organization culture has been linked to increased satisfaction and commitment by the employees as well as a decreased turnover rate

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25
Q

collaborative/clan culture organization

A

extended family of employees that are hard to replace. strong sense of loyalty and tradition with a strong focus on teamwork, participation and consensus

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26
Q

creative culture firm organization

A

a dynamic, entrepreneurial and creative group, known for taking risks and being innovative

individual initiative and freedom are encouraged

the environment can be competitive

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27
Q

control or hierarchical culture

A

highly structured and formal feeling

management aims for security and predictability

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28
Q

market culture

A

result driven organization focused on job completion. employees are competitive and goal oriented

the emphasis on winning unifies the organization

success to this type of firm culture is market share penetration

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29
Q

professional liability insurance

A

insurance coverage that provides protection against damages by claims caused by negligence by the architect including errors and omissions in the drawings that might cause damage to the owner, contractor or other party

30
Q

general liability insurance

A

this insurance provides protection againts damamges from an architect’s office operations and non-professional activities at a job site

owner and the general contractor should carry this type of insurance as well

31
Q

worker’s compensation

A

insurance for employees in case of illness, injury or disability stemming from their employment. this is only required when architects have employees

by law, all employers should have this type of protection

the contractor includes the cost for this insurance in their overhead costs as part of their bid

32
Q

property (builder’s risk) insurance

A

this insurance is held by the owners, it covers any damage, loss of work on-site or off-site en route to the site

33
Q

loss of use insurance

A

held by the owner and covers any loss suffered by the owner due to delays in construction from the construction damages, accidents, fire, explosions, or any hazards that might prevent the project from completing on time

34
Q

product & completed operations insurance

A

this insurance is held by the contractor, and is liability for damages caused by installed goods after the completion of construction and transfer of title

35
Q

contractual indemnification

A

the liability is assumed y the contract and the contractor agrees to hold the owner & architect harmless for any damages that are a result of specific events

36
Q

subrogation

A

the insurance company has the right to “step into the shoes” of the policy holder to make a claim for damages caused by others and can sue the responsible party on behalf of the owner

37
Q

waiver of subrogation

A

the A201 general conditions contains a clause for a ‘waiver of subrogation’ in order to minimize lawsuits and claims against the parties

this places the risk of loss on the insurance company but prevents the insurance company from suing parties that might not be at fault

waiving subrogation works well if all parties agree to it as everyone is exposed to the same level of risk

38
Q

how can a practice avoid being exposed to claims?

A

practice conflict dispute resolution techniques to avoid or contain potential disputes

39
Q

risk management strategies

A

avoid risk, transfer risk, assume risk, control risk

40
Q

what should architect keep aware of to avoid risks?

A

changes in government regulations or new building materials, systems, codes, standards and technologies

adoption of new rating systems, such as LEED

awareness of what other design professionals are doing, how they are rendering their services and what services they are providing

41
Q

indemnification

A

is insurance terminology for the “hold harmless” clause

42
Q

common claims against architects

A

negligence - by duty, breach, cause and damage

breach of contract

vicarious liability

alternative project relationships

third party actions: architects can be held liable for negligence by parties the architect had no contractual relationship with

43
Q

what are some good forms of documentation that architects take?

A

daily notebook or site observation reports of electronic devices are not used

write in ink, use bound or spiral notebooks, number pages sequentially and add dates

photographs and videos

status letters and issue letters

meeting minutes & memos of phone conversations

progress payment logs

equipment use records

44
Q

reasons architects should consider the purchase of professional liability insurance:

A

business survival

continuing operations

contract requirements

social responsibility

45
Q

amount of years for statute of limitations for patent defects from the date of substantial completion

A

4 years

varies from state to state

46
Q

amount of years for statute of limitations for latent defects from the date of substantial completion

A

10 years

varies from state to state

47
Q

methods to limit liability

A

carry the necessary types and appropriate amounts of insurance

select projects carefully by working within the firm’s capacity, ability and expertise

utilize a written contract (in many states, it is illegal for an architect to work without a contract)

efficient in-house organization and communication with project ream, owner and contractor

document key decisions and approvals

provide contract admin services

48
Q

who is responsible for the means, methods, techniques, sequences and safety of a project during construction?

A

the contractor

49
Q

the architect is not responsible for what during construction?

A

exhausting on-site visits

continuous on-site inspections

means, methods, techniques, sequences and safety

50
Q

who can stop the work of a project under construction?

A

the owner, the contractor (is unpaid) and a local building officials have the authority to stop the work, not the architect

51
Q

what is the architect’s role in observation of a project while it is under construction?

A

to observe the progress and the quality of work in order to determine if it conforms to the drawings and contract documents. if it conforms to the drawings and contract documents. any findings should be reports to the owner

52
Q

an architect cannot negotiate the terms of any settlement without the _________’s permission

A

insurer’s

53
Q

client dispute resolution include what type of practices?

A

engaging the client, communicate with the client and secure closure for any issues that may have occurred, and provide documentation

54
Q

arbitration

A

this is the preferred method of dispute resolution

the arbitrator is more knowledgeable in the the industry while a judge or jury may not be

disputes can be solved quickly, in weeks or months rather than years in litigation

55
Q

arbitration process

A

one party files a demand for arbitration, the other party can then

  1. files the answer in response to the allegations
    2.files a counterclaim
  2. does nothing and the demand will be considered to have been denied

then an arbitrator will be selected and agreed upon by both parties

after a hearing is held the arbitrator will render a decision within 30 days

56
Q

mediation

A

a mediator assists the parties in settling a dispute

57
Q

litigation

A

involves the court system and is expensive and long process involving attorneys

58
Q

methods that lead to better agreements

A

establish standard in-house practices

get professional help

use standard agreement forms

59
Q

construction means and methods

A

are the responsibility of the contractor

60
Q

customized agreements to have on hand

A

full service agreements of the types most frequently uses

small of limited space agreements

notice to proceed

consultant agreements

common exhibits

61
Q

design professional liens

A

used if construction has not started yet but a building permit or other government approval has been obtained

requirements vary by state

62
Q

For a professional lien: the amount of days the professional must give the landowner written demand letter for payment specifying the amount owed.

A

10 days

63
Q

mechanics liens

A

used if construction has started on the project and filed against the owner for service or materials owed that have not been paid

64
Q

mechanics liens - amount of days notice for preliminary notice

A

20 days for subcontractors/vendors. the architect and general contractor do not have to send the 20 day notice as they are in direct contact with the owner

may vary by state

65
Q

what is a notice of cessation?

A

a notice that the work has formally stopped. this is filed by the owner

the owner want to file this in order to reduce the time in which claimants can file a lien

66
Q

stop notice

A

a lien against funds, similar to mechanics lien, but it can be used on private or public projects

67
Q

notice of non-responsibility

A

when a tenant of a space is performing work on a building and the owner of the building wants to protect themselves from any liens that stem from that work

68
Q

how to protect the owner from liens

A

require the owner to purchase a performance bond and payment bond

receive signed lien releases from the subcontractors at the time of payment

collect and hold retainage

collect contractor’s affidavit of release of liens

69
Q

what are some terms that are open to negotiation in the contract?

A

scope of services or additional services

project schedule

owner’s responsibilities or coordination responsibilities

project insurance and limitations of liability

ownership and reuse of documents

reimbursable expenses

hourly rates

70
Q

what items fall under copyright protection

A

intangible assets associate with inventions and design such as digital data, and design methodologies, and software

71
Q

owners use of the instruments of service

A

the owner must retain the architect for their instruments of service (drawings), if they don’t and they decide to use another architect using the same instruments of service, the owner and new architect take responsibility for any errors or omissions

72
Q

common limitations that the architect should consider securing

A

disclaiming the architect’s responsibility for the contractor’s means and methods of construction and for job site safety

limiting the architect’s liability for the accuracy of cost estimates to redesigning at the architect’s expense

disclaiming liability for results if interpretations and decisions made in good faith

disclaiming third party beneficiary status to a third party

waiving subrogation for damages caused by property insurance

disclaiming responsibility for a decision made by the owner without the architect’s approval

disclaiming responsibility for hazardous materials

PCM (3 decks)

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