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.
2
Q
Canon I: General Obligations (5)
A
Knowledge & Skill
Standards of Excellence
Natural & Cultural Heritage
Human Rights
Allied Arts & Industries
3
Q
Canon II: Obligations to the Public (3)
A
Conduct
Public Interest Services
Civic Responsibility
4
Q
Canon III: Obligations to the Client (4)
A
Competence
Conflict of Interest
Candor & Truthfulness
Confidentiality
5
Q
Canon IV: Obligations to the Profession (2)
A
Honesty & Fairness
Dignity & Integrity
6
Q
Canon V: Obligations to Colleagues (3)
A
Professional Environment
Intern & Professional Development
Professional Recognition
7
Q
Canon VI: Obligations to the Environment (3)
A
Sustainable Design
Sustainable Development
Sustainable Practice
8
Q
Within what timeframe must an ethical complaint be filed?
A
1 year
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.
10
Q
What entities might the building department pass your drawings on to for review?
A
Public works, water, police, environmental agencies
11
Q
Responsible Control
A
Control of the documents being produced and stamped by you (the architect).
12
Q
Plan Stamping
A
Term for inappropriate use of stamp on drawings that were not prepared under your responsible control.
13
Q
MCE
A
Mandatory Continuing Education
14
Q
Comity
A
AKA Endorsement. Accepting qualifications for licensure from another state.
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)
16
Q
Common building types exempt from requiring architect
A
Structures not intended for human occupation and small residential structures.
17
Q
(5) Courses of Action with a Filed Complaint
A
- Dismissal (toss out)
- Investigation (look into)
- Referral to the State (above board’s jurisdiction)
- Deferral (hold off on taking action)
- Disciplinary action (take action)
18
Q
What are the two types of violations?
A
- by untrained/unlicensed individuals
- by trained individuals
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
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
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
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.
23
Q
AIA Code of Ethics Structure
A
Canon > Broad Principle > Ethical Standards > Rule of Conduct
24
Q
Rule of Conduct
A
Specific rules that are mandatory for members
25
Possible actions resulting from AIA Code of Ethics complaint
Admonition
Censure
Suspension
Termination
26
Admonition
Slap on the wrist
27
Censure
Public posting of incident / complaint.
28
NCARB Model Rules of Conduct (5)
Competence
Conflict of Interest
Full Disclosure
Compliance with Laws
Professional Conduct
29
IDP
Intern Development Program
30
What is the minimum number of MCE credits per calendar year?
18
31
Per NCARB Model Law and Model Regulations, how many HSW credits are required per calendar year?
12
32
How long is an LU (Learning Unit)
1 hour
33
How many sustainable design LU's are required per year?
4 (of the 12 required HSW credits)
34
Four components of a Financial Plan
Revenue projection, Staffing plan, Overhead expense budget, and Profit Plan
35
Revenue Projection
An exercise in assessing current projects, revenue, award probability, and future acquisitions needed (if any)
36
What is payroll burden?
A percentage multiplier to cover indirect expenses in addition to paying the employee
37
How is a billing rate assembled?
(Hourly rate + Indirect expense (HR*Payroll Burden)) / (1-profit goal %)
38
Billing Multiplier
Rate / Billing Rate
39
Calculating Profit Goal (25% scenario)
Scenario: PG is 25%
Treat beginning amount like reciprocal (75%). Divide by 3, multiply by 4.
40
How to calculate Direct Salary Expense (DSE)
Chargeable hours * Hourly Rate
41
How to calculate Billable Revenue
Direct Salary * Staffing Multiplier
42
How to calculate indirect salary
Non-chargeable hours * Hourly Rate
43
How to calculate overhead rate
Overhead Expense
/
Direct Salary Expense
44
How to calculate DSE (Salary) Break Even Rate?
(Direct Salary Expense + Overhead)
/
Direct Salary Expense
45
How to calculate DPE (direct personnel expense) Break Even Rate?
(DSE + Payroll Burden (% of DSE))
+
(OH without Payroll Burden)
/
(Direct Salary Expense)
46
Calculate Projected Net Fees
Projected Gross Revenue - (reimbursables + consultant fees)
47
Profit Target (calculation)
Projected Net Fees - (direct salary expense + indirect expenses)
Divide by Project Net Fees to get %
48
What is a Party Dispute?
A dispute pertaining to a specific project
49
What is an Administrative Dispute?
A dispute related to civic statutes and licensing regulations.
50
What four components must be proven when asserting a negligence claim?
In Order: Duty, Breach, Cause, and Damage
51
Duty (Negligence)
Proof that the architect has a legal obligation to do (or not to do) something.
52
Breach (Negligence)
Proof that the architect failed to fulfill a legal obligation.
53
Cause (Negligence)
Proof that the breach of duty is what caused the harm.
54
Damage (Negligence)
Proof that actual harm or damage was done as a result of the breach.
55
What are the 3 essential terms of an architectural contract?
Project Scope, Timeframe, and Fees
56
3 most important legal terms in a contract
Limitations of Liability, Mutual Waiver of Consequential Damages, and Indemnification Provisions
57
Limitations of Liability Clause
Limits the claims by the owner against the architect to a certain amount
58
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.)
59
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.
60
When does indemnification from consultants fail?
If the consultant is unable to financially take responsibility or if their insurance is inadequate
61
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).
62
Statute of Repose
The timeframe in which a claim can be filed measured from the date of the alleged digression.
63
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)
64
Revenue
Money earned from projects measured by the contract sums of all services (plus additional services)
65
Expense Types
Direct and Indirect
66
Direct Expense Types (3)
Salaries, Consultant Fees, Reimbursables
67
Indirect expense types (3)
Non-project support, Payroll burden, Admin/IT work
68
Reimbursable Expenses
Transportation/Travle, Communication expenses, Project incurred fees, printing, postage, Consultant expenses
69
Profit (calculation)
Revenue - Expenses
70
Cash Accounting
- Money is realized when paid
- Real time accounting
71
Accrual Accounting
- Money realized when invoiced
72
Liquidity
Ability to reduce assets to cash relatively quickly, if need be
73
Solvency
Ensuring enough cash is on hand to pay for obligations.
74
What happens if solvency bottom line is compromised?
You take out a loan until solvency can be restored.
75
What forecasts are included in cash flow projections?
billings, amounts/timing of collections, other revenues, and cash disbursements
76
Efficiency Based Firm Structure
Relies of on repeatable processes that employs lower earning staff on the largest volume tasks.
77
Experienced Based Firm Structure
Relies on applying accrued knowledge and can perform unique and complex project types.
78
Expertise Based Firm Structure
Relies on deep knowledge of design. Typically employs less intern level staff to better control quality.
79
What is the most common legal structure or an architecture firm?
S Corporation
80
Financial setup to decide when starting a firm
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
81
SBA
Small Business Administration. A great resource for start up loans
82
Four major components of a business plan
1. Purpose
2. Finances
3. Operations
4. Marketing
83
What legal structure describes a single architect who has not taken action on defining their entity?
Sole proprietorship
84
Sole Proprietorship (5)
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
85
What legal structure describes pair or group of architects who have not taken action on defining their entity?
General partnership
86
General Partnership (5)
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
Limited Liability Partnership (LLP) (3)
1. Pair of group of architects
2. Partnership filed with secretary of state
3. Partners are not liable for firm claims
88
(3) levels of corporate participants
1. Stockholders
2. Directors
3. Officers
89
C Corporation (3)
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
Dividends
After-tax profits passed down to Shareholders. Taxed again as shareholder income.
91
S Corporation (3)
1. Closely held corporation
2. Stockholders act as directors and officers
3. No federal taxes if less than 100 stockholders
92
Limited Liability Company (LLC)
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
(6) Elements of a strategic plan
1. Mission
2. Vision
3. Initiatives
4. Goals
5. Strategies
6. Action Plans
94
Working Capital
Current Assets - Current Liabilities
95
Firm Wide Profit
Profit / Net Revenue
96
Indirect Expense Factor
Total Indirect Expense / Direct Salary Expense
97
Risk retained through architecture
1. Meet Code
2. Meet Life Safety Requirements
98
True / False: Architects are responsible for meeting ADA requirements
False - architects are not directly responsible for ADA but can be looped into lawsuits through owner/architect indemnification.
99
Active Risk Reduction (5)
1. QA/QC
2. Construction Observation
3. Calling on Experts
4. Talent Retention
5. Professional Development
100
Contractual Risk Reduction (4)
1. Limitations of Liability
2. Indemnification
3. Consequential Damages Clause
4. Delivery Methods
101
Indemnification
Transfer of risk from primary contract holder to the responsible parties (i.e. improper MEP systems installed - transfer to MEP consultant)
102
Solvency
Ability to cover expenses and stay in business
103
Common Project Deterents (4)
1. Bad geotech report
2. Poor client financial plan
3. Outside of expertise
4. Staff is too busy to take on project
104
Reasons to not work with a certain client (3)
1. Values do not align
2. Poor payment history
3. Poor reputation
105
Construction change communication workflow (6)
1. Inform client
2. Clarify expectations
3. Analyze options
4. Present options
5. Document decisions
6. Update the client
106
SWOT Analysis
Strengths, Weaknesses, Opportunities, and Threats
107
Studio/Team based organization
Known as a horizontal approach. Studios or teams of people work on a project from start to finish.
108
The (3) tenets of leadership
Awareness, Ability, and Commitment
109
Adaptive Problem Solving
Problem solving in a timely manner within the bounds of a system or context. In-the-box problem solving.
110
Innovative Problem Solving
Breaking out of the system or context to find applicable solutions. Out-of-the-box problem solving.
111
Bridge Problem Solving
Combination of adaptation and innovation. Thinking outside of the box to find solutions while sticking to established rules/laws of the trade.
112
113
Benefits of selling your firm internally
Continuation of values. Easier to maintain clients and employees.
114
Tail end insurance
Insurance policy purchased when a firm has dissolved. Covers your work for a specified amount of time.
115
Benefits of transitioning firm externally.
Higher price, faster transition, and added skills to firm.
116
Risk Distribution Scorecard
Used in multi team collaboration to weigh and quantify risks.
117
Task Oriented Leadership
Focused on clearly defining goals and roles.
118
Relationship Oriented Leadership
Focused on building trust and goodwill.
119
Title Act
Limits the right to use the term architect to licensed practitioners.
120
Practice Act
Limits the right to practice architect to licensed practitioners
121
True/False: architects practicing abroad via reciprocity do not need to maintain CE credits.
False. CE requirements of the originating license must be met
122
Fee split agreement
A tool where collaborating businesses establish labor and expense allocations based on scope.
123
Return on Overhead (ROO)
Profit / Overhead
124
ISO 9000
125
The Natural Step - Backcasting (3)
1. Establish future ideals
2. Declare current benchmark
3. Develop measurable steps to meet future ideals
126
3 levels of knowledge management
Individual, organizational, and social
127
Intrinsic knowledge
Knowledge based on personal experience
128
Explicit knowledge
Knowledge that is directly tied to data
129
7 elements of knowledge management
1. Identify
2. Connect
3. Share
4. Promote
5. Capture
6. Standardize
7. Measure
130
Enterprise Resource Planning system (ERP)
Financial systems
131
Contract between Arch/consultant and Contractor/subs
C401 and A401
132
Indemnification
Hold-harmless provisions to assign risk (and cost of damages) from one responsible party to another
133
Limitation of liability
Assigns caps to the amount of risk a contracting party is responsible for.
134
Owner's Budget Clause
Describes the architect's obligation to adhere to the owner's budget.
135
Traditional Additional Services related to Pre-Desgin (4)
Programming
Site/Building Analysis
Project Cost & Feasibility
Planning & Zoning Regulations
136
Entitlements Phase
Sometimes-required jurisdictional phase where a zoning review is conducted to ensure compliance. Making sure typology & exterior aesthetics meet local requirements.
137
Entitlements Phase Milestones (4)
Code analysis, site plans, floor plans, elevations
138
What main tasks are addressed in Design Development? (2)
Further detailed building and select MEP & major systems
139
B&N Tasks (2)
Assist client in preparing bid package & assist in reviewing/selection procedures
140
Who coordinates changes to the work in CA?
The architect
141
Negatives of DBB (3)
Contract time, controlled communication and unknown construction costs until bidding.
142
Positives of CMa (4)
Expedited scheduling, sooner cost estimations, owner has less supervision responsibilities, and owner has cost control.
143
Negatives of CMa (3)
Added cost (unknown until bidding), multiple prime contractors, CMa is not a significant influence on the outcome of project.
144
Positives of CMc (4)
GMP cost control, reduces owner management requirements, quality control on change orders, and most compatible with fast-track
145
Negatives of CMc (2)
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
Positives of DB (2)
Fastest method, early cost estimates / scheduling, and less administrative disputes
147
Negatives of DB (3)
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
Positives of IPD (4)
Reduced disputes, equal buy-in from all parties, increased collaboration, BIM models are more easily realized.
149
Negatives of IPD (3)
Not for all firm structures, increased risk (more entities sharing risk), finances are more complicated.
150
Sole Proprietor Taxes
Taxed with personal income
151
Pros of Sole Proprietorship (2)
Simple to control work, Administrative costs are kept low (few employees if any)
152
Cons of Sole Proprietorship (3)
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
Partnership Taxes
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
Information Return
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
Contents of a Partnership Agreement (9)
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
How is an LLC different than a Partnership?
Partners that act as 'members' of the LLC for liability and tax reasons.
157
LLC Liabilities
Members including licensed professionals have limited liability (similar to corporations)
158
Buy/Sell Agreement
Agreement used to transfer membership to another/new party.
159
How is a corporation different from an LLC?
Members are directors that are considered employees of the corporation.
160
Corporation taxes
Corp has its own tax ID. Salaries are deducted from revenue & the remainder is taxed at the corp tax rate.
161
S Corporation
Shareholders are taxed on their share of corporate income - S corp itself is not subject to income tax.
162
Corporate Establishment Requirements
File articles of incorporation, obtain federal tax number, follow membership requirements, shareholders must be licensed.
163
Can corporations conduct business out-of-state?
Yes, as long as they register in that state as a 'foreign corporation'.
164
Corporation Liability
Personal assets are not accessible for business debts, professionals remain liable for E&O, all owners are typ. jointly liable.
165
Licensed / Admitted Companies
State-fund-backed companies. If a firm goes insolvent during a claim, the fund can cover the remainder of costs.
166
Claims-Made Policy
Applies to professional liability policies for claims made during the policy term.
167
Occurance Policy
Applies to general liability policies. Similar to claims made but not for professional liability.
168
Scenario: what happens when there is a claim against a past employee at a firm that has an occurrence policy?
The past employee is covered. However - if the firm terminates the occurrence policy, that employee is at risk for work performed while employed.
169
Coverage Exclusion
specifically limit coverage included in a policy
170
Coverage Endorsement
expand the coverage in a policy
171
Coverage: Split Limits
A policy has one limit per claim and a separate limit per policy year.
172
Project Professional Liability Insurance
Lasts the duration of a project and is used for projects that need a particular coverage beyond the norm.
173
Business Interruption Insurance
Revenues lost due to fire, flood, damage, etc.
174
Fidelity Bonds
Burglary, theft, and destruction caused by an employee or associate.
175
Architectural Billings Index (ABI)
Industry specific economic indicator developed by the AIA to track business conditions across the profession.
176
What accounting style is typically used for profit-loss and balance sheet development?
Accrual basis accounting
177
What accounting method is typically used for filing taxes?
Cash basis accounting
178
How are reimbursable expenses counted as a form of revenue?
The amount invoiced to client is marked up. The markup is a form of revenue.
179
Overhead rate
Indirect expenses / direct labor
180
Break even rate
Overhead rate + 1.00
181
Utilization rate
Direct labor time / total labor time
182
Net multiplier
Net operating revenue / total direct labor
183
Financial performance goals to consider (6)
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
Prospect (revenue term)
Better than a 50% chance of being rewarded
185
Suspect (revenue term)
Less than a 50% chance of being rewarded
186
What percentage range should total direct labor be of the NOR?
28-32%
187
What is the overhead rate comprised of?
Indirect labor expenses and general / administrative expenses
188
Steps to establishing billing rate (3)
1. Establish overhead rate
2. Add 1.0 to get break even rate
3. Divide by compliment of profit %
189
Steps to establishing billing rate (3)
1. Establish overhead rate
2. Add 1.0 to get break even rate
3. Divide by compliment of profit %
190
Who typical stipulates the fee basis?
Client
191
What fee type is almost always used on public sector projects?
Stipulated lump sum or percentage of construction cost
192
What is it called when you keep records of your cash and accrual accounting?
Double entry bookkeeping
193
What four components make up the Mattox Format profit and loss statement?
1. Revenue
2. Direct labor
3. Indirect expenses
4. And miscellaneous revenue / expenses
194
Chart of Accounts
List of project numbers, billing codes, and target profits from each
195
What project delivery method limits risk for owner on complex project?
CMa
196
Who does your consultant’s insurance company pay to remedy their faulty work?
The architect’s insurance company
197
Who is responsible for meeting zoning requirements?
Architect
198
What is ISO 9001?
4 point quality management standards that include plan, do, check, act
199
What is the difference between liquidated damages and direct damages?
Liquidated damages are due to delay while direct damages are due to inadequacies in the work
200
What are two forms of binding dispute/resolution?
Arbitration & Litigation
201
What should you follow on a historic preservation project for possible tax credits?
Standards for rehabilitation of the Technical Preservation Services of the National Parks Service
202
Fastest delivery method
DB
203
4 options that jurisdictional licensing boards have when reviewing a case.
1. Investigate
2. Refer to another authority
3. Defer for a later date
4. Dismiss
204
Who is responsible for securing the permit?
The contractor
205
Can an independent contractor use the company’s software licenses?
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
True or false, record documents is in additional service.
True
207
What regulation is required once a private employer reaches 15 or more employees?
ADA
208
What type of schedule is best for a project that is large complex and has a specific target date of completion?
Critical path schedule
209
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?
All other limits are also increased by $2 million
210
Type IIB
Floors have zero fire resistance
211
Fast track
Phasing design activities overlap with construction via bid packages
212
Return on Equity (calc)
That year’s profit / total investment to date
213
Profit multiplier
Projected profit % x projected NOR
/
Projected direct labor expense
214
Net multiplier
Break even rate + profit multiplier
