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Practice Management (PcM) Flashcards

1
Q

What is the main goal of Antitrust law?

A

Enforcing the code of ethics while still fostering economic competition.

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2
Q

Canon I: General Obligations (5)

A

Knowledge & Skill
Standards of Excellence
Natural & Cultural Heritage
Human Rights
Allied Arts & Industries

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3
Q

Canon II: Obligations to the Public (3)

A

Conduct
Public Interest Services
Civic Responsibility

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4
Q

Canon III: Obligations to the Client (4)

A

Competence
Conflict of Interest
Candor & Truthfulness
Confidentiality

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5
Q

Canon IV: Obligations to the Profession (2)

A

Honesty & Fairness
Dignity & Integrity

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6
Q

Canon V: Obligations to Colleagues (3)

A

Professional Environment
Intern & Professional Development
Professional Recognition

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7
Q

Canon VI: Obligations to the Environment (3)

A

Sustainable Design
Sustainable Development
Sustainable Practice

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8
Q

Within what timeframe must an ethical complaint be filed?

A

1 year

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9
Q

Traditional Entitlements Based Approach

A

Begin with schematic design, submit to planning & zoning boards, develop construction documents, submit to building department & fire authority.

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10
Q

What entities might the building department pass your drawings on to for review?

A

Public works, water, police, environmental agencies

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11
Q

Responsible Control

A

Control of the documents being produced and stamped by you (the architect).

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12
Q

Plan Stamping

A

Term for inappropriate use of stamp on drawings that were not prepared under your responsible control.

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13
Q

MCE

A

Mandatory Continuing Education

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14
Q

Comity

A

AKA Endorsement. Accepting qualifications for licensure from another state.

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15
Q

BEA

A

Broadly Experienced Architect. Someone who has enough experience already in the field that it is alone enough for reciprocal licensure. (BEFA for foreign practitioners)

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16
Q

Common building types exempt from requiring architect

A

Structures not intended for human occupation and small residential structures.

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17
Q

(5) Courses of Action with a Filed Complaint

A
  1. Dismissal (toss out)
  2. Investigation (look into)
  3. Referral to the State (above board’s jurisdiction)
  4. Deferral (hold off on taking action)
  5. Disciplinary action (take action)
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18
Q

What are the two types of violations?

A
  1. by untrained/unlicensed individuals
  2. by trained individuals
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19
Q

What are the requirements of a WBE and MBE?

A
  • 51% Women / Minority
  • Meet state net worth limits
  • Meet state size standards
  • Certification is required
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20
Q

What are requirements to be DBE (Disadvantaged Business Enterprise)?

A
  • 51% Women / Minority
  • Personal net worth of business owner must be under $1.32M
  • Certification is Required
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21
Q

What are requirements to be SBE (Small Business Enterprise)?

A
  • $7M average annual revenue over 3 years
  • No personal net worth limit for company owners
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22
Q

What project types are most likely to require WBE, DBE, MBE, or SBE?

A

Public housing, K-12, higher education, government projects, etc.

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23
Q

AIA Code of Ethics Structure

A

Canon > Broad Principle > Ethical Standards > Rule of Conduct

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24
Q

Rule of Conduct

A

Specific rules that are mandatory for members

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25
Q

Possible actions resulting from AIA Code of Ethics complaint

A

Admonition
Censure
Suspension
Termination

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26
Q

Admonition

A

Slap on the wrist

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27
Q

Censure

A

Public posting of incident / complaint.

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28
Q

NCARB Model Rules of Conduct (5)

A

Competence
Conflict of Interest
Full Disclosure
Compliance with Laws
Professional Conduct

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29
Q

IDP

A

Intern Development Program

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30
Q

What is the minimum number of MCE credits per calendar year?

A

18

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31
Q

Per NCARB Model Law and Model Regulations, how many HSW credits are required per calendar year?

A

12

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32
Q

How long is an LU (Learning Unit)

A

1 hour

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33
Q

How many sustainable design LU’s are required per year?

A

4 (of the 12 required HSW credits)

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34
Q

Four components of a Financial Plan

A

Revenue projection, Staffing plan, Overhead expense budget, and Profit Plan

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35
Q

Revenue Projection

A

An exercise in assessing current projects, revenue, award probability, and future acquisitions needed (if any)

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36
Q

What is payroll burden?

A

A percentage multiplier to cover indirect expenses in addition to paying the employee

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37
Q

How is a billing rate assembled?

A

(Hourly rate + Indirect expense (HR*Payroll Burden)) / (1-profit goal %)

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38
Q

Billing Multiplier

A

Rate / Billing Rate

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39
Q

Calculating Profit Goal (25% scenario)

A

Scenario: PG is 25%
Treat beginning amount like reciprocal (75%). Divide by 3, multiply by 4.

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40
Q

How to calculate Direct Salary Expense (DSE)

A

Chargeable hours * Hourly Rate

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41
Q

How to calculate Billable Revenue

A

Direct Salary * Staffing Multiplier

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42
Q

How to calculate indirect salary

A

Non-chargeable hours * Hourly Rate

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43
Q

How to calculate overhead rate

A

Overhead Expense
/
Direct Salary Expense

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44
Q

How to calculate DSE (Salary) Break Even Rate?

A

(Direct Salary Expense + Overhead)
/
Direct Salary Expense

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45
Q

How to calculate DPE (direct personnel expense) Break Even Rate?

A

(DSE + Payroll Burden (% of DSE))
+
(OH without Payroll Burden)
/
(Direct Salary Expense)

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46
Q

Calculate Projected Net Fees

A

Projected Gross Revenue - (reimbursables + consultant fees)

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47
Q

Profit Target (calculation)

A

Projected Net Fees - (direct salary expense + indirect expenses)

Divide by Project Net Fees to get %

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48
Q

What is a Party Dispute?

A

A dispute pertaining to a specific project

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49
Q

What is an Administrative Dispute?

A

A dispute related to civic statutes and licensing regulations.

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50
Q

What four components must be proven when asserting a negligence claim?

A

In Order: Duty, Breach, Cause, and Damage

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51
Q

Duty (Negligence)

A

Proof that the architect has a legal obligation to do (or not to do) something.

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52
Q

Breach (Negligence)

A

Proof that the architect failed to fulfill a legal obligation.

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53
Q

Cause (Negligence)

A

Proof that the breach of duty is what caused the harm.

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54
Q

Damage (Negligence)

A

Proof that actual harm or damage was done as a result of the breach.

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55
Q

What are the 3 essential terms of an architectural contract?

A

Project Scope, Timeframe, and Fees

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56
Q

3 most important legal terms in a contract

A

Limitations of Liability, Mutual Waiver of Consequential Damages, and Indemnification Provisions

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57
Q

Limitations of Liability Clause

A

Limits the claims by the owner against the architect to a certain amount

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58
Q

Mutual Waiver of Consequential Damages

A

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.)

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59
Q

Indemnification Provisions

A

Reimbursement clause for the owner due to architect acts or omissions. This language needs to be carefully reviewed with legal counsel and surety.

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60
Q

When does indemnification from consultants fail?

A

If the consultant is unable to financially take responsibility or if their insurance is inadequate

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61
Q

Statute of Limitations

A

The timeframe in which a claim can be filed from the date of project completion (can be 3-10 years depending on state).

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62
Q

Statute of Repose

A

The timeframe in which a claim can be filed measured from the date of the alleged digression.

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63
Q

Betterment

A

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)

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64
Q

Revenue

A

Money earned from projects measured by the contract sums of all services (plus additional services)

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65
Q

Expense Types

A

Direct and Indirect

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66
Q

Direct Expense Types (3)

A

Salaries, Consultant Fees, Reimbursables

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67
Q

Indirect expense types (3)

A

Non-project support, Payroll burden, Admin/IT work

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68
Q

Reimbursable Expenses

A

Transportation/Travle, Communication expenses, Project incurred fees, printing, postage, Consultant expenses

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69
Q

Profit (calculation)

A

Revenue - Expenses

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70
Q

Cash Accounting

A
  • Money is realized when paid
  • Real time accounting
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71
Q

Accrual Accounting

A
  • Money realized when invoiced
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72
Q

Liquidity

A

Ability to reduce assets to cash relatively quickly, if need be

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73
Q

Solvency

A

Ensuring enough cash is on hand to pay for obligations.

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74
Q

What happens if solvency bottom line is compromised?

A

You take out a loan until solvency can be restored.

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75
Q

What forecasts are included in cash flow projections?

A

billings, amounts/timing of collections, other revenues, and cash disbursements

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76
Q

Efficiency Based Firm Structure

A

Relies of on repeatable processes that employs lower earning staff on the largest volume tasks.

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77
Q

Experienced Based Firm Structure

A

Relies on applying accrued knowledge and can perform unique and complex project types.

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78
Q

Expertise Based Firm Structure

A

Relies on deep knowledge of design. Typically employs less intern level staff to better control quality.

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79
Q

What is the most common legal structure or an architecture firm?

A

S Corporation

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80
Q

Financial setup to decide when starting a firm

A
  1. Accounting system
  2. Tax Filing status based on legal structure
  3. Set up a business bank account
  4. Enlist advisors
  5. Acquire startup funding
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81
Q

SBA

A

Small Business Administration. A great resource for start up loans

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82
Q

Four major components of a business plan

A
  1. Purpose
  2. Finances
  3. Operations
  4. Marketing
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83
Q

What legal structure describes a single architect who has not taken action on defining their entity?

A

Sole proprietorship

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84
Q

Sole Proprietorship (5)

A
  1. Single architect
  2. No entity filing required
  3. No personal protection from liability
  4. Taxes are reported as personal
  5. Entity dies with the sole proprietor
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85
Q

What legal structure describes pair or group of architects who have not taken action on defining their entity?

A

General partnership

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86
Q

General Partnership (5)

A
  1. Pair or group of architects
  2. No entity filing required
  3. Management roles are shared b/w partners
  4. Partners are personally liable for actions of all partners.
  5. Taxes are reported personally & individually
87
Q

Limited Liability Partnership (LLP) (3)

A
  1. Pair of group of architects
  2. Partnership filed with secretary of state
  3. Partners are not liable for firm claims
88
Q

(3) levels of corporate participants

A
  1. Stockholders
  2. Directors
  3. Officers
89
Q

C Corporation (3)

A
  1. Publicly traded organization
  2. Corporate taxes paid on income
  3. Stockholders are not actively involved in the management or actions of the firm
90
Q

Dividends

A

After-tax profits passed down to Shareholders. Taxed again as shareholder income.

91
Q

S Corporation (3)

A
  1. Closely held corporation
  2. Stockholders act as directors and officers
  3. No federal taxes if less than 100 stockholders
92
Q

Limited Liability Company (LLC)

A
  1. Members are owners
  2. Managers are elected by the members
  3. Personal liability protected from firm claims
  4. Choice of how to file taxes
93
Q

(6) Elements of a strategic plan

A
  1. Mission
  2. Vision
  3. Initiatives
  4. Goals
  5. Strategies
  6. Action Plans
94
Q

Working Capital

A

Current Assets - Current Liabilities

95
Q

Firm Wide Profit

A

Profit / Net Revenue

96
Q

Indirect Expense Factor

A

Total Indirect Expense / Direct Salary Expense

97
Q

Risk retained through architecture

A
  1. Meet Code
  2. Meet Life Safety Requirements
98
Q

True / False: Architects are responsible for meeting ADA requirements

A

False - architects are not directly responsible for ADA but can be looped into lawsuits through owner/architect indemnification.

99
Q

Active Risk Reduction (5)

A
  1. QA/QC
  2. Construction Observation
  3. Calling on Experts
  4. Talent Retention
  5. Professional Development
100
Q

Contractual Risk Reduction (4)

A
  1. Limitations of Liability
  2. Indemnification
  3. Consequential Damages Clause
  4. Delivery Methods
101
Q

Indemnification

A

Transfer of risk from primary contract holder to the responsible parties (i.e. improper MEP systems installed - transfer to MEP consultant)

102
Q

Solvency

A

Ability to cover expenses and stay in business

103
Q

Common Project Deterents (4)

A
  1. Bad geotech report
  2. Poor client financial plan
  3. Outside of expertise
  4. Staff is too busy to take on project
104
Q

Reasons to not work with a certain client (3)

A
  1. Values do not align
  2. Poor payment history
  3. Poor reputation
105
Q

Construction change communication workflow (6)

A
  1. Inform client
  2. Clarify expectations
  3. Analyze options
  4. Present options
  5. Document decisions
  6. Update the client
106
Q

SWOT Analysis

A

Strengths, Weaknesses, Opportunities, and Threats

107
Q

Studio/Team based organization

A

Known as a horizontal approach. Studios or teams of people work on a project from start to finish.

108
Q

The (3) tenets of leadership

A

Awareness, Ability, and Commitment

109
Q

Adaptive Problem Solving

A

Problem solving in a timely manner within the bounds of a system or context. In-the-box problem solving.

110
Q

Innovative Problem Solving

A

Breaking out of the system or context to find applicable solutions. Out-of-the-box problem solving.

111
Q

Bridge Problem Solving

A

Combination of adaptation and innovation. Thinking outside of the box to find solutions while sticking to established rules/laws of the trade.

113
Q

Benefits of selling your firm internally

A

Continuation of values. Easier to maintain clients and employees.

114
Q

Tail end insurance

A

Insurance policy purchased when a firm has dissolved. Covers your work for a specified amount of time.

115
Q

Benefits of transitioning firm externally.

A

Higher price, faster transition, and added skills to firm.

116
Q

Risk Distribution Scorecard

A

Used in multi team collaboration to weigh and quantify risks.

117
Q

Task Oriented Leadership

A

Focused on clearly defining goals and roles.

118
Q

Relationship Oriented Leadership

A

Focused on building trust and goodwill.

119
Q

Title Act

A

Limits the right to use the term architect to licensed practitioners.

120
Q

Practice Act

A

Limits the right to practice architect to licensed practitioners

121
Q

True/False: architects practicing abroad via reciprocity do not need to maintain CE credits.

A

False. CE requirements of the originating license must be met

122
Q

Fee split agreement

A

A tool where collaborating businesses establish labor and expense allocations based on scope.

123
Q

Return on Overhead (ROO)

A

Profit / Overhead

124
Q

ISO 9000

125
Q

The Natural Step - Backcasting (3)

A
  1. Establish future ideals
  2. Declare current benchmark
  3. Develop measurable steps to meet future ideals
126
Q

3 levels of knowledge management

A

Individual, organizational, and social

127
Q

Intrinsic knowledge

A

Knowledge based on personal experience

128
Q

Explicit knowledge

A

Knowledge that is directly tied to data

129
Q

7 elements of knowledge management

A
  1. Identify
  2. Connect
  3. Share
  4. Promote
  5. Capture
  6. Standardize
  7. Measure
130
Q

Enterprise Resource Planning system (ERP)

A

Financial systems

131
Q

Contract between Arch/consultant and Contractor/subs

A

C401 and A401

132
Q

Indemnification

A

Hold-harmless provisions to assign risk (and cost of damages) from one responsible party to another

133
Q

Limitation of liability

A

Assigns caps to the amount of risk a contracting party is responsible for.

134
Q

Owner’s Budget Clause

A

Describes the architect’s obligation to adhere to the owner’s budget.

135
Q

Traditional Additional Services related to Pre-Desgin (4)

A

Programming
Site/Building Analysis
Project Cost & Feasibility
Planning & Zoning Regulations

136
Q

Entitlements Phase

A

Sometimes-required jurisdictional phase where a zoning review is conducted to ensure compliance. Making sure typology & exterior aesthetics meet local requirements.

137
Q

Entitlements Phase Milestones (4)

A

Code analysis, site plans, floor plans, elevations

138
Q

What main tasks are addressed in Design Development? (2)

A

Further detailed building and select MEP & major systems

139
Q

B&N Tasks (2)

A

Assist client in preparing bid package & assist in reviewing/selection procedures

140
Q

Who coordinates changes to the work in CA?

A

The architect

141
Q

Negatives of DBB (3)

A

Contract time, controlled communication and unknown construction costs until bidding.

142
Q

Positives of CMa (4)

A

Expedited scheduling, sooner cost estimations, owner has less supervision responsibilities, and owner has cost control.

143
Q

Negatives of CMa (3)

A

Added cost (unknown until bidding), multiple prime contractors, CMa is not a significant influence on the outcome of project.

144
Q

Positives of CMc (4)

A

GMP cost control, reduces owner management requirements, quality control on change orders, and most compatible with fast-track

145
Q

Negatives of CMc (2)

A

CM may not serve owner’s best interest (CM may want to cut costs to benefit from GMP), added cost to have a CM

146
Q

Positives of DB (2)

A

Fastest method, early cost estimates / scheduling, and less administrative disputes

147
Q

Negatives of DB (3)

A

Costs are not competitive (no bid), architect no longer has to protect owner’s interest, DB entity may be committed before documentation is done (potential conflict of interest)

148
Q

Positives of IPD (4)

A

Reduced disputes, equal buy-in from all parties, increased collaboration, BIM models are more easily realized.

149
Q

Negatives of IPD (3)

A

Not for all firm structures, increased risk (more entities sharing risk), finances are more complicated.

150
Q

Sole Proprietor Taxes

A

Taxed with personal income

151
Q

Pros of Sole Proprietorship (2)

A

Simple to control work, Administrative costs are kept low (few employees if any)

152
Q

Cons of Sole Proprietorship (3)

A

Personal and Business expenses must be kept separate, Errors & Omissions are personal and unlimited, All assets are on the line (except what is protected by insurance)

153
Q

Partnership Taxes

A

personal and professional taxes are filed under each partner’s personal identity via Information Return. The partnership itself does not pay federal income tax.

154
Q

Information Return

A

Used in partnership tax filing to report / delineate revenues. Each partner will transfer this information onto their personal tax return to report as personal income.

155
Q

Contents of a Partnership Agreement (9)

A
  1. Financial contributions
  2. Responsibility delineations
  3. Fiduciary clauses
  4. Balance of liabilities
  5. Organizational structure
  6. Balance of profit/loss
  7. New partner protocols
  8. Dispute resolution
  9. Termination procedures.
156
Q

How is an LLC different than a Partnership?

A

Partners that act as ‘members’ of the LLC for liability and tax reasons.

157
Q

LLC Liabilities

A

Members including licensed professionals have limited liability (similar to corporations)

158
Q

Buy/Sell Agreement

A

Agreement used to transfer membership to another/new party.

159
Q

How is a corporation different from an LLC?

A

Members are directors that are considered employees of the corporation.

160
Q

Corporation taxes

A

Corp has its own tax ID. Salaries are deducted from revenue & the remainder is taxed at the corp tax rate.

161
Q

S Corporation

A

Shareholders are taxed on their share of corporate income - S corp itself is not subject to income tax.

162
Q

Corporate Establishment Requirements

A

File articles of incorporation, obtain federal tax number, follow membership requirements, shareholders must be licensed.

163
Q

Can corporations conduct business out-of-state?

A

Yes, as long as they register in that state as a ‘foreign corporation’.

164
Q

Corporation Liability

A

Personal assets are not accessible for business debts, professionals remain liable for E&O, all owners are typ. jointly liable.

165
Q

Licensed / Admitted Companies

A

State-fund-backed companies. If a firm goes insolvent during a claim, the fund can cover the remainder of costs.

166
Q

Claims-Made Policy

A

Applies to professional liability policies for claims made during the policy term.

167
Q

Occurance Policy

A

Applies to general liability policies. Similar to claims made but not for professional liability.

168
Q

Scenario: what happens when there is a claim against a past employee at a firm that has an occurrence policy?

A

The past employee is covered. However - if the firm terminates the occurrence policy, that employee is at risk for work performed while employed.

169
Q

Coverage Exclusion

A

specifically limit coverage included in a policy

170
Q

Coverage Endorsement

A

expand the coverage in a policy

171
Q

Coverage: Split Limits

A

A policy has one limit per claim and a separate limit per policy year.

172
Q

Project Professional Liability Insurance

A

Lasts the duration of a project and is used for projects that need a particular coverage beyond the norm.

173
Q

Business Interruption Insurance

A

Revenues lost due to fire, flood, damage, etc.

174
Q

Fidelity Bonds

A

Burglary, theft, and destruction caused by an employee or associate.

175
Q

Architectural Billings Index (ABI)

A

Industry specific economic indicator developed by the AIA to track business conditions across the profession.

176
Q

What accounting style is typically used for profit-loss and balance sheet development?

A

Accrual basis accounting

177
Q

What accounting method is typically used for filing taxes?

A

Cash basis accounting

178
Q

How are reimbursable expenses counted as a form of revenue?

A

The amount invoiced to client is marked up. The markup is a form of revenue.

179
Q

Overhead rate

A

Indirect expenses / direct labor

180
Q

Break even rate

A

Overhead rate + 1.00

181
Q

Utilization rate

A

Direct labor time / total labor time

182
Q

Net multiplier

A

Net operating revenue / total direct labor

183
Q

Financial performance goals to consider (6)

A
  1. Projected net billing and revenue
  2. Project consultant fees %
  3. Project-related expenses
  4. Staff size and salary expense
  5. Overhead expense & BER
  6. Net profit
184
Q

Prospect (revenue term)

A

Better than a 50% chance of being rewarded

185
Q

Suspect (revenue term)

A

Less than a 50% chance of being rewarded

186
Q

What percentage range should total direct labor be of the NOR?

187
Q

What is the overhead rate comprised of?

A

Indirect labor expenses and general / administrative expenses

188
Q

Steps to establishing billing rate (3)

A
  1. Establish overhead rate
  2. Add 1.0 to get break even rate
  3. Divide by compliment of profit %
189
Q

Steps to establishing billing rate (3)

A
  1. Establish overhead rate
  2. Add 1.0 to get break even rate
  3. Divide by compliment of profit %
190
Q

Who typical stipulates the fee basis?

191
Q

What fee type is almost always used on public sector projects?

A

Stipulated lump sum or percentage of construction cost

192
Q

What is it called when you keep records of your cash and accrual accounting?

A

Double entry bookkeeping

193
Q

What four components make up the Mattox Format profit and loss statement?

A
  1. Revenue
  2. Direct labor
  3. Indirect expenses
  4. And miscellaneous revenue / expenses
194
Q

Chart of Accounts

A

List of project numbers, billing codes, and target profits from each

195
Q

What project delivery method limits risk for owner on complex project?

196
Q

Who does your consultant’s insurance company pay to remedy their faulty work?

A

The architect’s insurance company

197
Q

Who is responsible for meeting zoning requirements?

198
Q

What is ISO 9001?

A

4 point quality management standards that include plan, do, check, act

199
Q

What is the difference between liquidated damages and direct damages?

A

Liquidated damages are due to delay while direct damages are due to inadequacies in the work

200
Q

What are two forms of binding dispute/resolution?

A

Arbitration & Litigation

201
Q

What should you follow on a historic preservation project for possible tax credits?

A

Standards for rehabilitation of the Technical Preservation Services of the National Parks Service

202
Q

Fastest delivery method

203
Q

4 options that jurisdictional licensing boards have when reviewing a case.

A
  1. Investigate
  2. Refer to another authority
  3. Defer for a later date
  4. Dismiss
204
Q

Who is responsible for securing the permit?

A

The contractor

205
Q

Can an independent contractor use the company’s software licenses?

A

No. Contracted Employees are typically provided tools by their own employers, or are reimburse for a purchasing tools or licenses to perform their work.

206
Q

True or false, record documents is in additional service.

207
Q

What regulation is required once a private employer reaches 15 or more employees?

208
Q

What type of schedule is best for a project that is large complex and has a specific target date of completion?

A

Critical path schedule

209
Q

What happens to the limits on all insurance policies held by the firm if the umbrella policy for the firm is increased to $2 million?

A

All other limits are also increased by $2 million

210
Q

Type IIB

A

Floors have zero fire resistance

211
Q

Fast track

A

Phasing design activities overlap with construction via bid packages

212
Q

Return on Equity (calc)

A

That year’s profit / total investment to date

213
Q

Profit multiplier

A

Projected profit % x projected NOR
/
Projected direct labor expense

214
Q

Net multiplier

A

Break even rate + profit multiplier

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