Business Structure

Question 1

What is a business started, owned, and operated by one individual?

Answer 1

sole proprietorship

Question 2

What is fiduciary responsibility?

Answer 2

to act in the best interests of another person or entity

Question 3

What are the 3 main types of partnerships?

Answer 3

general partnership, limited partnership, limited liability partnership/LLP

Question 4

What is a partnership called when the partners are personally liable in lawsuits or for other legal claims?

Answer 4

general partnership

Question 5

What is a partnership called when someone besides the working partners have invested in the business?

Answer 5

limited partnership

Question 6

What type of partnership is generally limited to licensed professionals such as accountants, lawyers, architects, physicians, and engineers?

Answer 6

limited liability partnership/llp

Question 7

What is a hybrid of the general partnership or sole proprietorship and the corporation and is afforded the limited liability protection of a corporation?

Answer 7

LLC

Question 8

What protects employees, mostly union employees, from unfair labor practices by employers?

Answer 8

National Labor Relations Act (Wagner Act)

Question 9

What is determined based on the amount of money an employee is paid (salary rate) plus the costs for the employee’s fringe benefits, plus the cost of office overhead, plus allowance for profit?

Answer 9

billing rates

Question 10

What is used to determine the billing rates?

Answer 10

net multiplier

Question 11

The net multiplier is a factor derived by dividing net revenue of the design firm (no consultants or reimbursable) by the cost of __

Answer 11

direct labor

Question 12

With __ , the costs of providing taxes, benefits and the like are included with the employee’s base salary.

Answer 12

DPE direct personnel expense

Question 13

What type of insurance protects the designer things such as incorrect specifications, mistakes on drawings, and incorrect installations of furniture?

Answer 13

malpractice or errors and omissions

Question 14

What is a document prepared by the client that contains the specific information the client is seeking from the interested design firm?

Answer 14

RFP (request for proposal)

Question 15

What is a statement by an insurance company that ensures completion of the project should the contractor default on its obligations?

Answer 15

Performance bond

Question 16

What promises payment to labor and for materials by a defaulting contractor?

Answer 16

labor and material payment bond

Question 17

What are the four elements that must be included in a contract?

Answer 17

(1)an offer (2)acceptance (3)consideration (4)mutual agreement

Question 18

What secures the Owner and Interior Designer against loss or damage if a person is injured because of the Contractor’s negligence?

Answer 18

indemnification

Question 19

What are agreements between the owner and contractor or vendor that are used for large projects with a fixed payment amount? Include schedule, cost, and scope of work.

Answer 19

A series agreements

Question 20

What are agreements between the Owner and Architect or Designer? Outlines basic, supplemental, or additional services.

Answer 20

B series agreements

Question 21

Under the Standard Form of Agreement, what activities are included in an interior designer’s services?

Answer 21

design development, specification production, shop drawing review, and final punch list

Question 22

What constitutes “Additional Services” to a project proposal?

Answer 22

Additional work the client may want to add after the initial contract is signed.

Question 23

What is the first thing you should do before an initial meeting with a client?

Answer 23

Determine the needs, wants, and characteristics of the project.

Question 24

A designer would include this in an owner-designer agreement to avoid the possibility of a costly and drawn out legal process?

Answer 24

provisions for arbitration

Question 25

What’s the most legally binding aspect of design?

Answer 25

specifications

Question 26

What is an agreement between the landlord and tenant that details the initial tenant improvements (TI) to be built?

Answer 26

Tenant Work Letter

Question 27

What fee structure is a specified fee that will cover all the work and expenses required in the project scope of services? This fee cannot be increased beyond the fixed amount.

Answer 27

lump-sum fixed fee

Question 28

What fee structure is service that is billed for each hour or part of an hour for work on behalf of the client based on an hourly rate?

Answer 28

Hourly billing

Question 29

What fee structure is like the “no upset” fee, this sets a maximum that the designer can not go over without prior approval from the client?

Answer 29

not-to-exceed fees based on hourly billing

Question 30

What fee structure is commonly used in residential design. The client pays a specific markup on the actual cost of the merchandise and other items that the designer sells to the client?

Answer 30

cost-plus percentage markup

Question 31

What fee structure is commonly used in commercial design by contractors? The client pays the actual cost of the work plus an amount for the overhead and profit. This includes all trade subcontractor work, labor, materials, and equipment.

Answer 31

cost-plus fixed fee

Question 32

What fee structure is more common in commercial projects? The fee is determined by a rate per square foot multiplied by the amount of square footage of the project.

Answer 32

square foot pricing

Question 33

What fee structure is based on a negotiated percentage of the construction cost or the cost of goods and installation for the project?

Answer 33

Percentage of actual construction/merchandise cost

Question 34

What fee structure prices services based on the value or quality of the services instead of focusing on the cost of providing those services?

Answer 34

value-oriented method

Question 35

How would a project manager keep track of the progress of the job to see if the planned aspects of time and fee are being accomplished?

Answer 35

by comparing weekly time sheet with original estimates