Topic 6: Project And Business Managment Flashcards
What is a contract?
A bar gin between two or more parties, each of whom agrees to exchange something of the others desire to obtain
What are the two fundamental elements of a contract?
An offer and an acceptance
What provisions should be included in a contract?
- Parties to the contract and dates
- Scope of work/ designer responsibilities
- Purchasing agreements (if any)
- Methods of payment
- Reimbursable expenses (ie. Travel costs, postageect.)
- Extra services
- Responsibilities of the client
- Ownership of documents
- Provisions for Arbitration
- Termination of contract
- Signatures
What are the phases in a scope of basic interior design services?
- Programming
- Schematic design
- Design development
- Contract documents
- Bidding
- Contract admin
- Purchase orders
What is “project cost “?
The total cost or estimated cost to the owner of all components of the project
What are the 4 options the project owner has if lowest bid exceeds project budget?
- Owner gives written approval for budget increase
- Owner authorize rebidding
- Abandon project
- Have designer modify design to reduce project cost ( if fixed cost limit in contract, designer modify design without charge)
What are the 5 basic ways fees can be charged?
- Fixed fee
- Hourly rate
- Percentage of project cost
- Area fee
- Retail method
What is a post occupant evaluation ?
Review of a completed project after the client has occupied the space for some time (3-6 months)
What does a project manager do?
Coordinates the entire process of a job, from inception to final move-in
What is “time planning”? in relation to project management
Scheduling the work required and making sure there is enough fees and staff to complete
What is “fee projection”? In terms of project management
Taking the total fee the designer will review for the project and allocates it to the schedule and staff members who will work on the project
What is quality control?
An organized set of procedures to aid in meeting the expectations of client
What are the 7 basic techniques for quality control?
- Programming
- Checklists
- Process - based systems (automates procedures fo no human error)
- Quality management meetings
- Staffing.
- Quality circles (small group of employees who identify and solve problems)
- Corporate knowledge (taking info learned previously and applying to new project)
What reasons may a project be going over budget or lagging work progress?
- Work people working on project (inexperienced)
- People working not keeping to schedule
- People working spending to much time
4.timesheets not filled properly
What info should a project notebook contain?
-General reference info
- contracts
-Fees/schedule
- programming
- budget
- communication logs
-Construction admin
- close out and follow up
What is project perfection syndrome?
The point at which a great deal of additional time & fees is required to make progress towards “perfection” -project managers if the additional time and money is justified
What are the two major parts of a project’s timeline?
Design time & construction/install time
What factors contribute to the time required to complete a project?
- Size and complexity
- Number of people working on it
- experience of people working (senior vs. Junior)
- type of client
- Fixed dates
What is the most common and easiest method to schedule both design and construction
Gantt chart - various actives listed on vertical axis and timeline on the horizontal
ADD CHART PG. 28-15
What is a CPM chart?
Critical path method- graphically depicts all tasks required, their sequence, duration
ADD PIC PG. 28-15
What is “pre-design work”? What are some examples?
Consists of all activities taken by designer before actual schematic design begins
-Research
- determining scope
- identify design team and consults
- setting up files
-Programming
Who are stakeholders of a project?
All those who control project, work on it, or have interest in it’s outcome
May include:
-Owner
- Owners team (investors, decision makers, user of final space)
- Interior designer and their team
-Consultants
What is the “ design - bid-build “ method?
Designer designs the project and prepares documents for which are sent out for bidding by interested contractors, winning bid enters contract with owner to start construction
What is a “design-build” method?
Design and construction is the responsibility of one entity
What is the first step in the “contract administration phase”?
Finding a contractor and establishing a contract between them and the owner
What are the two types of contracts that can be established between owner and contractor?
- Negotiated contract (based on recommendations or previous working relationship)
- Bid/tendered contract (based on project going for bid)
Why is competitive bidding the most popular method of finding a contractor
Usually results in the lowest cost
What is the purpose of prequalification of bidders?
To narrow the bids to be from only contractors who meet certain standards of reliability, experiences, financial stability, and performance
What are the two ways to notify prospective bidders of a project?
- Advertising publicly
- Invitation to bid
What is an “addendum”?
A written or graphic document issued by the interior designer before the execution of the contract that modifies the bidding documents by additions, deletions, clarifications, or corrections.
These are issued before bids are submitted
What is a pre-bid conference?
A meeting with interior designer, owner, consultants, and all bidders during which bidders can ask questions
What is normally included in the “ instructions to bidders”
- Consideration of bid (general information of bidding process
- bidder’s representation (understanding of all documents)
- Bidding documents
- substitutions
- Bonds
- Interpretation/correction of bidding documents
- Addenda
- Modifaction or withdrawl from bid
- post-bid information
Why are bid forms so important?
All bid’s will be in identical format which make is easier to compare and evaluate all bids
What is “bid security”?
Ensures successful bidder will enter into a contract with the owner, if not, the bid security is retained to compensate for the difference between the low bid and the next lowest bid.
What is a performance bond?
A statement by a surety company that obligates the surety company to complete construction of the project should the contractor default on his or her obligations by hiring another contractor or supplying additional money to allow construction to proceed
How can construction market conditions (local economy) affect the bids contractors submit
?
A depressed local economy will have contractors bid low just to get a job, while a good economy will have contractors be more selective on jobs they bid on
What is an “ alternate “ on a bid form?
A request for the contractor to supply a price for some type of variation on the base bid - this allows the owner flexibility in modifying project cost
i.e. Contractor can propose an alternate flooring material than specified in the drawing to show owner price can be reduced this much if this change is made.
What is contract administration?
All activities performed by interior designer during the time the contract between owner and the contractor is in force
What is the interior designers responsibility when reviewing submittalls such as shop drawing or samples?
Only responsible for ensuringing design intent is being followed, they are not responsible for determine accuracy of measurements or completeness of details act.
If a designer does not catch a mistake on shop drawings, who is responsible for ensuring the final build of the shop drawings matches the contract documents?
Contractor
What are the 3 main purposes of interior designers construction site observations?
- Become familiar with progress and quality of work
- Make sure no defects or deficiencies in construction
- Determine it construction is in accordance with contract documents
Who is solely responsible for safety on job site?
Contractor
What happens if Interior designer gives suggestions or direction about job site safety?
Interior designer may also assume legal responsibility and be held liable
What should an interior designer do is they observe safety violation on a job site?
Call the violation attention to the contractor and owner without suggestions on how to correct it
Who is responsible for arranging field tests required by the contract documents and law?
Contractor - they must pay for and arrange the time with notice to the interior designer where and when test are preformed so they con observe
What happens in a situation where additional field tests are required beyond what is required by the contract documents?
Contractor to make arrangements only after written authorization from the owner, in this case owner pays
When field tests come back with a portion of work not conforming to contract documents, what happens?
Contractor must pay all costs required to correct the problem
Why is it important to log all standard /required forms but also all correspondence such as emails, call logs etc.?
For any disputes that arise or client objects fee payments
What is a “claim”?
Demand or assertion by the contractor or owner seeking payment of money, time exstention, adjustment to contract terms
When and how must a claim be made?
Made through written notice to other party and interior designer
Must be initiated within 21 days for occurrence of what prompted the claim
Do claims need to be substantiated with documents or evidence?
Yes
How long does interior designer have to respond to a claim? What are possible responses?
10 days of receipt of claim
- acceptance of claim
- Rejection of claim
- ask for more supporting data
- suggest compromise
What are the two common types of construction claims
- Claims for additional time
- Claims for concealed or unknown conditions
What is mediation and arbitration? When is it required?
Mediation: process by which neutral third party facilitates and assist disputing parties to negotiate a settlement
Arbitration: when mediation does not result in a settlement, a legally binding process for resolving disputes without litigation in a court of law. An arbitrator hears both parties arguments and makes a legally binding decision
These are required when the interior designer can not resolve a claim
What is the difference between an addendum and change order
Addendum outline changes before bid is awarded. Change order is after
What are the 3 types of change orders?
- Minor change in the work: modifaction does not change contract sum or time
- Construction change directive: change is urgent but owner and contractor can’t agree price and revision time written by designer
- Formal change order: variation of original contract document that changes contract price or time
How does a contractor receive periodic progress payments?
Contractor submits notarized application for payment at least 10 days before the date established for each payment in owner-contractor agreement ‘
Application to include value of work done plus material purchased not used yet
When approved, interior designer signs and sends to owner for payment
Can the owner retain payment from a contractors application to receive progress payment? Why?
Yes, usually 10% - to use as leverage to ensure work is completed.
What reasons may an interior designer withhold a contractor progress payment application?
- Defective work
- third party claims
- contactor fails to pay subcontractor
- Evidence work can not be completed with unpaid balance contract sum
- evidence work will not be completed on time
- contractor fails to build in accordance to contract documents
What is the owner responsible for providing to furniture installers?
- Adequate facilities for delivery, unloading, staging, and storage
- best route from delivery to final placement - free of obstacles or other trades work
-Schedule for use of elevators and unloading facilities
Who is solely responsible for for furniture inspection at delivery and final install?
Owner
Who is allowed to reject work that is damaged or not conforming with contract documents?
Owner- interior designer can make suggestions but authority is with owner
Who initiates project close out and how?
Contractor - notifies interior designer in writing with comprehensive list of items to be completed or corrected before final payment
What is substantial completion?
The stage where the work is suffienctly complete in accordance with contract documents so owner is able to occupy the space for it’s intended purpose
What is a punch list ( deficiency list) ?
List of items made by interior designer during first inspection that needs to be completed or corrected
When is certificate of substantial completion issued?
After interior designers final inspection shows the work is substantially complete
When can the contractor apply for final payment?
Once the interior designer issues certificate of substainal completion
Who is responsible for final clean up once construction is complete?
Contractor
What are the steps of project close out?
- Contractor iniaties close out
- Interior designer preforms first inspection,
- Punch list created
- Punch list items completed
- Final inspection by interior designer
- Certificate of substainal completion
- Final payment to contractor
What is a post-occupancy-evaluation?
Review of completed project after didn’t has occupied for approx 3-6 months
What documents are included in the contract documents?
- Owner-contractor (or vendor) agreement
- General conditions
- sublimentary conditions
- the drawings
- Specifications
- any addenda’s
- Modifications (issued after contract execution)
What modifications can be added to contract documents?
- change order
- Written amendment to the contract signed by both parties
- Written interpretation by interior designer
- Written order for minor change
Are bidding documents apart of the contract documents?
No - but often bound into project manual
What are liquidated damages?
Money paid by contractor to owner for everyday the project is late
Why does owner charge contractor liquidated damages?
To cover intimated losses owner will incur it project is not completed on time.
What contract document is most important for FF&E?
Standard form of agreement between owner and vendor for furniture, furnishings, and equipment (AIA document A151)
What is the uniform commercial code?
Provides consistent rules for commerce in the United States- establishes regulations for the buying and selling of goods
UCC covers sales contracts, product liability, warranties, ownership, and risk
What are common carriers, contract carriers, and private carriers?
Common: those who offer services to public
Contract: provide service only to certain companies
Private: companies who own and operate their own trucks to move their own merchandise
When a private carrier is used, who is responsible for the goods?
The carrier company
When a common carrier is used, who is responsible for the goods
The owner of the goods
What does FOB stand for? What does it mean?
Free on board - manufacture pays for loading the goods onto vehicle.
What does “FOB factory” and “FOB destination” mean?
FOB factory: means title is transferred at the factory, the buyer pays for transportation and manufacture is not responsible for damages
FOB destination: means seller (manufacturer) is responsible for shipping and recovering damages
What is a vendor? What are they responsible for?
Anyone who sells products or services to interior designer or client
They ave responsible for: ordering, delivering, and installing
What happens when owner rejects FF&E items during final inspection?
Owner notices vendour in writing and then vendor has 30 days to provide evidence of arrangement to remedy the basis for rejection
What is a sole proprietorship? What are the advantages? And disadvantages?
Owned and operated by an individual
Advantages:
- easy to set up
-Total management controlled by owner
- tax advantages to owner
Disadvantages:
- owner liable for debts and losses from their personal income and assets
- difficult to raise capital and establish credit
What is the simplest business type?
Sole proprietorship
What is a general partnership business? What are the advantages and disadvantages?
Two or more people share in the management, profits, and risks
Advantages:
-Easy to form
- more skills and talents from mix of people
Disadvantage:
- all partners liable for actions of others
- personal assets are vulnerable
What are limited partners?
Investors into general partnerships and only receive portion of profit, no say in management
What is a corporation? Advantages and disadvantages?
Association of individuals, created by statutory requirements, is independent from its members
Advantages:
- finically and legally independent from stock holders
-Personal assets not at risk
- Lower taxes
Disadvantages
- Inital set up costs
- ongoing paperwork to maintain business
What is LLC and LLP? Advantages?
Limited liability Company and limited liability partnership- hybrid of corporation and partnership
Advantages:
- no personal liability
-Taxed like corporations
-Easier to set up than corporations
What is a joint venture?
Temporay association of two or more people or firms for purpose of completing a project
What ave the 6 main types of insurances for interior designers?
- Professional liability -protects designer it their mistake results in injuries or property damage
- General liability-range of insurances to project against claimsto designer or consultants
- Property insurance-protects designers building and its contents against disasters
- Personal injury insurance- protects designer against changes of slander and defamation
- Automobile insurance_- covers liability and damages from or on comapany vehicle(including employees personal while being used for work)
- Workers compensation insurance- protects employees in event of work-related injury
Does the project owner need their own insurance? If so, what type?
They need their own liability insurance and property insurance for the full insurable value of the work
What types of claims does a contractor need to have cover by insurance?
Claims for:
- workers com pensation
- damages fro m bodily injury etc. Of employees
- damages from bodily injury from non-employees
- personal injury (including stander and defamation)
- motor vechicals
- property damage
What are the two basic accounting methods?
Cash accounting: revenue and expenses are regorized at actual time business receives the cash or pays the bill
Accrual accounting: revenue and expenses are recognized at the time they are earned or incurred, whether or not cash is in hands
Who can and cannot use cash accounting method?
Used by single person or small films
Can not be used by cooperations or business that keeps an inventory
What is a balance sheet?
Summary of all assets and liabilities and shows the financial position of a business
What is a companies net worth?
Total assets less the total liabilities
What is profit and loss statement
Lists all income and expenses for certain period of time-the difference in these amounts shows the profit or loss for that period
What is a Cash flow statement
Shows the in’s and out’s of cash
What is the most fundamental equation for financial planning?
Profit + expenses = revenue
Revenue - expense = profit
What is the most important type of report for Interior design firm?
Project progress report: monitors progress of individual jobs, shows hours and labour cost for each phase as well as the amount to date
What is the most common way design firms charge clients
Hourly rate/billing rate
How does an Interior design firm calculate their billing rate?
- Cost Employee salary rate
- cost of employee fringe benefits
- cost of office overhead
- allowance for profit
What is a “ net multiplier”
A factor derived by dividing net revenue of the design firm by the cost of direct labour to cover all expenses and account for profit -most firms use net multiplier of 2.7 or 3.0
i.e. Employee rate is $ 40 an hour, firm will charge client $ 120 an hour (40 x3.0=120)
What is the “practiceact” and the “title act”
Practice: meet certain requirements and licenses to practice Interior design
Title: regulate who may use title of interior designer
Both are state/province specific
What questions can’t you ask someone you are interviewing?
- Age
- date of birth
- marital status
- national orgin
- Race
- maiden name
Should change orders be signed by owner?
Yes
What is the legal concept of “agency”?
The “agent” (interior designer) acts on behalf of the principle (the owner) in. Dealings with a third party ( contractor or vendor)
In terms of the law, what is “duty” and the 3 ways it is established?
What one person “owes” another in a particular relationship
- By terms of contract (written or orall
- Legislative enactment (building codes, licensing laws)
- Implied duties
What is liability and negligence?
Liability: legal responsibility for injury or damage to another person or property
Negligence: failure to use due care to avoid harming another person or property
What 3 conditions must be met for a designer to be found negligent?
- Legal duty establish between the parties
- Shown interior designer breached duty
- Shown the breach of duty was the cause of damages/injury
What actions can designers take to limit liability exposure?
- Well written contracts (and follow them thoroughly)
- Maintain active quality control
- Document all decisions,. meetings, observations etc.
- Be very carful of last minute decisions and substitutions
5.carry liability insurance
What are the two copyright categories for Interior design
- Traditional: copyright of drawings, specs, other pictorial reprenstation of interior designers work
- The design itself: copyright holder retains rights including pictorial representation, overall form, arrangement, and composition of the space. Means owner can not make unauthorized copies of the space
Who generally has the copyright to an Interior design?
Interior designer
Unless:
- Designer is employee of owner
- Copyright is assigned to owner(stated in owner-designer agreement
What techiques/ strategies firms use for marketing?
- Strong corporate identity (branding)
- Identifying and developing leads
- Brochure
- Audiovisual presentations
- News letters
- websites
- Advertising
How is Pr (public relations) different than marketing?
Pr is not tied to a particular potential job or client
What is public relations?
Establishing and communicating a firms presence to the public to create a positive image for the firm
What is the most common public relations method?
Press release - short statement concerning newsworthy event related to the design firm, sent to relevant publications in hope that editors will use it
What is a trade source?
Any dealer, manufacturer, representative, subcontractor, or tradesperson who may not work directly with designer but with contractor
What is a craftworker?
People who specialize in one type of construction or accessory like stained glass or fibre art
