Practice Management (PcM) Flashcards
What is the main goal of Antitrust law?
Enforcing the code of ethics while still fostering economic competition.
Canon I: General Obligations (5)
Knowledge & Skill
Standards of Excellence
Natural & Cultural Heritage
Human Rights
Allied Arts & Industries
Canon II: Obligations to the Public (3)
Conduct
Public Interest Services
Civic Responsibility
Canon III: Obligations to the Client (4)
Competence
Conflict of Interest
Candor & Truthfulness
Confidentiality
Canon IV: Obligations to the Profession (2)
Honesty & Fairness
Dignity & Integrity
Canon V: Obligations to Colleagues (3)
Professional Environment
Intern & Professional Development
Professional Recognition
Canon VI: Obligations to the Environment (3)
Sustainable Design
Sustainable Development
Sustainable Practice
Within what timeframe must an ethical complaint be filed?
1 year
Traditional Entitlements Based Approach
Begin with schematic design, submit to planning & zoning boards, develop construction documents, submit to building department & fire authority.
What entities might the building department pass your drawings on to for review?
Public works, water, police, environmental agencies
Responsible Control
Control of the documents being produced and stamped by you (the architect).
Plan Stamping
Term for inappropriate use of stamp on drawings that were not prepared under your responsible control.
MCE
Mandatory Continuing Education
Comity
AKA Endorsement. Accepting qualifications for licensure from another state.
BEA
Broadly Experienced Architect. Someone who has enough experience already in the field that it is alone enough for reciprocal licensure. (BEFA for foreign practitioners)
Common building types exempt from requiring architect
Structures not intended for human occupation and small residential structures.
(5) Courses of Action with a Filed Complaint
- Dismissal (toss out)
- Investigation (look into)
- Referral to the State (above board’s jurisdiction)
- Deferral (hold off on taking action)
- Disciplinary action (take action)
What are the two types of violations?
- by untrained/unlicensed individuals
- by trained individuals
What are the requirements of a WBE and MBE?
- 51% Women / Minority
- Meet state net worth limits
- Meet state size standards
- Certification is required
What are requirements to be DBE (Disadvantaged Business Enterprise)?
- 51% Women / Minority
- Personal net worth of business owner must be under $1.32M
- Certification is Required
What are requirements to be SBE (Small Business Enterprise)?
- $7M average annual revenue over 3 years
- No personal net worth limit for company owners
What project types are most likely to require WBE, DBE, MBE, or SBE?
Public housing, K-12, higher education, government projects, etc.
AIA Code of Ethics Structure
Canon > Broad Principle > Ethical Standards > Rule of Conduct
Rule of Conduct
Specific rules that are mandatory for members
Possible actions resulting from AIA Code of Ethics complaint
Admonition
Censure
Suspension
Termination
Admonition
Slap on the wrist
Censure
Public posting of incident / complaint.
NCARB Model Rules of Conduct (5)
Competence
Conflict of Interest
Full Disclosure
Compliance with Laws
Professional Conduct
IDP
Intern Development Program
What is the minimum number of MCE credits per calendar year?
18
Per NCARB Model Law and Model Regulations, how many HSW credits are required per calendar year?
12
How long is an LU (Learning Unit)
1 hour
How many sustainable design LU’s are required per year?
4 (of the 12 required HSW credits)
Four components of a Financial Plan
Revenue projection, Staffing plan, Overhead expense budget, and Profit Plan
Revenue Projection
An exercise in assessing current projects, revenue, award probability, and future acquisitions needed (if any)
What is payroll burden?
A percentage multiplier to cover indirect expenses in addition to paying the employee
How is a billing rate assembled?
(Hourly rate + Indirect expense (HR*Payroll Burden)) / (1-profit goal %)
Billing Multiplier
Rate / Billing Rate
Calculating Profit Goal (25% scenario)
Scenario: PG is 25%
Treat beginning amount like reciprocal (75%). Divide by 3, multiply by 4.
How to calculate Direct Salary Expense (DSE)
Chargeable hours * Hourly Rate
How to calculate Billable Revenue
Direct Salary * Staffing Multiplier
How to calculate indirect salary
Non-chargeable hours * Hourly Rate
How to calculate overhead rate
Overhead Expense
/
Direct Salary Expense
How to calculate DSE (Salary) Break Even Rate?
(Direct Salary Expense + Overhead)
/
Direct Salary Expense
How to calculate DPE (direct personnel expense) Break Even Rate?
(DSE + Payroll Burden (% of DSE))
+
(OH without Payroll Burden)
/
(Direct Salary Expense)
Calculate Projected Net Fees
Projected Gross Revenue - (reimbursables + consultant fees)
Profit Target (calculation)
Projected Net Fees - (direct salary expense + indirect expenses)
Divide by Project Net Fees to get %
What is a Party Dispute?
A dispute pertaining to a specific project
What is an Administrative Dispute?
A dispute related to civic statutes and licensing regulations.
What four components must be proven when asserting a negligence claim?
In Order: Duty, Breach, Cause, and Damage
Duty (Negligence)
Proof that the architect has a legal obligation to do (or not to do) something.
Breach (Negligence)
Proof that the architect failed to fulfill a legal obligation.
Cause (Negligence)
Proof that the breach of duty is what caused the harm.
Damage (Negligence)
Proof that actual harm or damage was done as a result of the breach.
What are the 3 essential terms of an architectural contract?
Project Scope, Timeframe, and Fees
3 most important legal terms in a contract
Limitations of Liability, Mutual Waiver of Consequential Damages, and Indemnification Provisions
Limitations of Liability Clause
Limits the claims by the owner against the architect to a certain amount
Mutual Waiver of Consequential Damages
Architect’s protection against damages that arise as an indirect cause of an act or omission (project delays due to a design flaw e.g.)
Indemnification Provisions
Reimbursement clause for the owner due to architect acts or omissions. This language needs to be carefully reviewed with legal counsel and surety.
When does indemnification from consultants fail?
If the consultant is unable to financially take responsibility or if their insurance is inadequate
Statute of Limitations
The timeframe in which a claim can be filed from the date of project completion (can be 3-10 years depending on state).
Statute of Repose
The timeframe in which a claim can be filed measured from the date of the alleged digression.
Betterment
Paying the premium or overage fees associated with adding an omitted element later on in the project (i.e. carpeting that was missed but is required for completion)
Revenue
Money earned from projects measured by the contract sums of all services (plus additional services)
Expense Types
Direct and Indirect
Direct Expense Types (3)
Salaries, Consultant Fees, Reimbursables
Indirect expense types (3)
Non-project support, Payroll burden, Admin/IT work
Reimbursable Expenses
Transportation/Travle, Communication expenses, Project incurred fees, printing, postage, Consultant expenses
Profit (calculation)
Revenue - Expenses
Cash Accounting
- Money is realized when paid
- Real time accounting
Accrual Accounting
- Money realized when invoiced
Liquidity
Ability to reduce assets to cash relatively quickly, if need be
Solvency
Ensuring enough cash is on hand to pay for obligations.
What happens if solvency bottom line is compromised?
You take out a loan until solvency can be restored.
What forecasts are included in cash flow projections?
billings, amounts/timing of collections, other revenues, and cash disbursements
Efficiency Based Firm Structure
Relies of on repeatable processes that employs lower earning staff on the largest volume tasks.
Experienced Based Firm Structure
Relies on applying accrued knowledge and can perform unique and complex project types.
Expertise Based Firm Structure
Relies on deep knowledge of design. Typically employs less intern level staff to better control quality.
What is the most common legal structure or an architecture firm?
S Corporation
Financial setup to decide when starting a firm
- Accounting system
- Tax Filing status based on legal structure
- Set up a business bank account
- Enlist advisors
- Acquire startup funding
SBA
Small Business Administration. A great resource for start up loans
Four major components of a business plan
- Purpose
- Finances
- Operations
- Marketing
What legal structure describes a single architect who has not taken action on defining their entity?
Sole proprietorship
Sole Proprietorship (5)
- Single architect
- No entity filing required
- No personal protection from liability
- Taxes are reported as personal
- Entity dies with the sole proprietor
What legal structure describes pair or group of architects who have not taken action on defining their entity?
General partnership