Quiz Questions

Question 1

Senior associate meetings and activities.

Answer 1

1. Client engagement and
   project vision meetings
2. Leadership and operations
   meetings.
3. Strategy and market
   positioning meetings

Question 2

The Schedule Performance Index

Answer 2

(SPI) is a metric used in project management that indicates how well a project is adhering to its planned schedule. It is calculated by taking the Earned Value (EV), which is the value of the work actually completed, and dividing it by the Planned Value (PV), which is the value of the work that was expected to be completed at a given point in time. In simpler terms:

SPI = EV / PV

Question 3

An Architectural balance sheet

Answer 3

serves as a crucial financial document that provides a snapshot of the firm’s financial health at a specific point in time. It details what the firm owns (its assets) and what it owes (its liabilities), along with the equity, which represents the ownership interest in the firm.

Question 4

AIA Code of Ethics

Answer 4

Obligations To
1. Public
2. Environment
3. Client
4. General Obligations
5. Obligations to Colleagues
6. Obligations to the Profession

Question 5

Additional Service

Answer 5

The easiest way to remember this is Additional Services = ADDING services after the contract is signed.

Question 6

Supplemental Services

Answer 6

SUPPLEMENTING architect’s basic services in a B101 contract.

Question 7

Which parties would carry a contingency?

Answer 7

Owner
Architect
Contractor
Sub-Contractor

Question 8

Essence of risk

Answer 8

Risk encompasses a range of issues including financial, legal, operational, and environmental factors, all of which could potentially impact project success.

Question 9

AIA professional services contracts

Answer 9

Agreements

Question 10

What is the most common issue with client-developed agreements/contracts in architectural projects?

Answer 10

A higher standard of care. Such contracts often set expectations beyond the customary professional standards (The standard of care for architects is the level of skill, expertise, and diligence that is expected from architects and architecture firms. It is the benchmark for professional practice and the threshold for protection under professional liability insurance.)

Question 11

What official term is used to describe the expansion of duties beyond what was originally agreed upon for the architects’ work?

Answer 11

“Scope creep” is the official term used within the architectural and project management industries to describe the phenomenon where the scope of a project expands beyond its original boundaries. This typically happens incrementally, as additional requests or requirements are added to the project after the initial scope has been defined and approved.
1. Incremental Addition: (small changes)
2. Lack of Formal Approval: (without proper adjustments to time, budget, or resources).
3. Impact on Project: (cost and time)

Question 12

Building Commissioning

Answer 12

procedure that begins at the project’s conception and continues through design, construction, and into the operation and maintenance of the building.

Question 13

Accounting Reports:

Answer 13

These reports are like history books. They meticulously document the firm’s past financial transactions. This includes balance sheets, profit and loss statements, and cash flow statements, offering a detailed and factual account of the firm’s incomes, expenses, assets, and liabilities. They provide a historical perspective, revealing the financial journey your firm has undergone.
(Accounting reports detail the firm’s design and project expenses)

Question 14

Financial Management Reports

Answer 14

these reports resemble a strategic plan or roadmap. They utilize the data from accounting reports and other sources to analyze, forecast, and strategically plan the firm’s financial future. These may include budget forecasts, financial projections, and business strategy reports, all geared towards guiding future business decisions, financial planning, and strategic growth.
(financial management reports focus on administrative and operational costs.)

Question 15

Strategy to improve junior staff retention

Answer 15

A. providing a supportive framework for career development and enabling the firm to understand the needs of junior talent better

B. Improve the compensation package for junior staff, including competitive salaries and bonuses tied to performance, to recognize and reward their contributions.

C. Offer junior staff opportunities to lead smaller projects or parts of larger projects, fostering a sense of responsibility and ownership in their work.

Question 16

Quality Management

Answer 16

Quality management is a system that supports and improves a firm’s performance.

Question 17

What is the most appropriate way to refer to a non-licensed architect from Germany?

Answer 17

Project Manager, Designer, Design Specialist, Foreign Architect in Germany, AIA Associate

Question 18

AIA Associate is defined as?

Answer 18

Associate member (individual without architectural license from a US licensing authority who meets other architectural educational or employment requirements set out in the Institute’s Bylaws)

Question 19

Professional liability Insurance

Answer 19

property loss, business income loss, automobile use, and business risks.

Question 20

What best describes the concept of a direct salary expense multiplier?

Answer 20

A number that, when multiplied by direct salary expenses, accounts for indirect costs and desired profit.

The direct salary expense multiplier is an essential financial tool used by architectural firms to ensure that the pricing of their services not only covers direct salary costs but also accommodates the overheads and generates a profit. Here’s how it works, simplified with an analogy:

Question 21

A firm has inadvertently agreed to a poorly written contract and excessively broad in scope. What is the main concern with this deal?

Answer 21

Ability to invoice for extra services due to:

A. Undefined Scope of Work.
B. Complexity and Uniqueness
C. Client Expectations
D. Financial Risks

Question 22

Financial well being of a firm

Answer 22

• Financial management overview
  -Accounting/Financial reports
  -Billable Hours
  -Profit and Loss Statements
  -Balance Sheets
  -Cash Flow Report
  _labor expenses

Question 23

Balance Sheet

Answer 23

A moment in time as to where the business is right now. Gives a big picture of the firm.

Question 24

Cash Flow Report

Answer 24

Actual money on hand. What it can be used for.

Question 25

Financial Planning

Answer 25

• Business Plan
• Management summary and financial plan
• Business Ratios
• Applications of cash and-
  Accrual reports
• Performance goals

Question 26

Overhead Rate

Answer 26

The Ratio of total indirect expenses to total direct labor

Question 27

Direct Expense

Answer 27

Project-related expenses for a firm and its outside consultants that are not reimbursable, plus project-related expenses included in all lump sum fee contracts.

Question 28

Net Profit

Answer 28

The dollars remaining after deducting all direct and indirect labor and indirect expenses, before any distributions are made or tax is paid.

Question 29

Current Earnings

Answer 29

The net dollar amount after all distributions are made and all applicable taxes have been deducted.

Question 30

Hourly Billing Rate

Answer 30

The dollar amount charged to a client is relative to one hour of direct labor.

Question 31

Net Multiplier

Answer 31

The net multiplier is the ratio of net operating revenue (NOR) to total direct labor. The measure of return on every dollar of direct labor.

Question 32

Break Even Rate

Answer 32

The overhead rate plus the unit cost of 1.00 for an hour of salary. overhead rate= 1.30+1.00=2.30 This means for every $1.00 of salary the firm must recapture $2.30 just to break even.

Question 33

Utilization Rate

Answer 33

Direct labor expressed as a percentage of total labor.

For individual rates use hours.

For firm rates use dollars

Question 34

Direct Labor

Answer 34

Same as direct salary. Time charged to projects, whether invoiced or not. Indirect labor: same as indirect salary. Time charged to non-project related activities.

Question 35

Reimbursable expenses

Answer 35

Project-related expenses that are invoiced to the client in addition to fees. These would also include a markup percentage on those expenses. The markup dollars are a form of revenue and are included in net operating revenue.

Question 36

Cash basis accounting

Answer 36

Income received and all salaries and expenses paid. This is the basis most commonly used for filling and paying quarterly and year-end taxes

Question 37

Net operating revenue

Answer 37

Represents the net dollars remaining after deducting the invoiced consultant’s fees and expenses. And all reimbursable and non-reimburable project- related expenses.

Question 38

Long Term Liabilities

Answer 38

Items that must be paid beyond the current 12-month period and diminish the impact of the value of a firm’s retained earnings.

Question 39

Equity

Answer 39

The value of shares of stock invested capital by shareholders, and the firms cumulative retained earnings.