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ARE: Practice Management > Division 1: Practice Management > Flashcards

Division 1: Practice Management Flashcards

1
Q

What is business organization?

A

The legal structure of an architectural firm

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2
Q

What is office organization?

A

The way a firm organizes to compete its work

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3
Q

What are ethical standards?

A

The accepted principles of correct professional conduct

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4
Q

What are human resources?

A

The practices and legal responsibilities pertaining to employing others

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5
Q

What is business development?

A

The use of marketing and public relations to increase business

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6
Q

What is a sole proprietorship?

A

A business type in which the business is owned by an individual

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7
Q

Which business type is the simplest?

A

Sole proprietorship

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8
Q

What is required to set up a sole proprietorship?

A

Business name, business location, company stationery, electronic communications systems, business licenses required by the local jurisdiction, and (if employees are hired) compliance with state and local requirements

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9
Q

What are some disadvantages of a sole proprietorship?

A

The owner is personally liable for the company’s debts and losses, establishing credit depends entirely on the owner’s personal credit rating, and it is difficult to sell even a successful sole proprietorship to others (because its success depends mainly on the personal reputation of the current owner)

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9
Q

What are some advantages of a sole proprietorship?

A

Ease of setup, total management control by the owner, and possible tax advantages (because business expenses and losses may be deducted from the gross income of the business)

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10
Q

What is a general partnership?

A

A business type in which two or more people, called general partners, share in the management, profits, and risks of the business

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11
Q

What is a limited partnership?

A

A business type in which there is at least one general partner (who invests in, manages, and is financially responsible for the business) and at least one limited partner (who invests in the business and receives a portion of its profits, but has no say in its management and is only liable to the extent of their investment)

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12
Q

What are some advantages of a general or limited partnership?

A

Ease of setup and, usually, collaboration between several people with distinct skills for the business

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13
Q

What are some disadvantages of a general or limited partnership?

A

The partners are personally liable for the company’s debts and losses and are responsible for each other’s actions

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14
Q

What is a c corporation?

A

An association of individuals that exists as a legal entity apart from its members

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15
Q

What is required to set up a c corporation?

A

Formal articles of incorporation drawn up by an attorney and filed with the state office

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16
Q

What are the levels of participants in a c corporation?

A

Shareholders (who own the corporation in proportion to the number of shares they own), directors (who are elected by the shareholders to have the fiduciary duty to act in the best interest of the shareholders and be responsible for broad policy decisions), and officers (who are elected by the directors to carry out day-to-day management)

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17
Q

What are some advantages of a c corporation?

A

The legal entity is financially and legally independent from its shareholders, each shareholder is financially liable only for the amount of money they invested, the shareholders’ personal assets are not at risk, the continuity of the legal entity is independent from changes in its participants, and capital can be easily raised through the sale of stock

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18
Q

What are some disadvantages of a c corporation?

A

The legal entity is taxed separately from its shareholders, high costs to establish the legal entity, and continuing paperwork and formal requirements to maintain the legal entity

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19
Q

What is an s corporation?

A

An association of individuals that exists as a legal entity apart from its members and allocates its income and losses directly to shareholders in proportion to their holdings

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20
Q

What is required to set up an s corporation?

A

Formal articles of incorporation drawn up by an attorney and filed with the state office

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21
Q

What are the levels of participants in an s corporation?

A

Shareholders (who own the corporation in proportion to the number of shares they own), directors (who are elected by the shareholders to have the fiduciary duty to act in the best interest of the shareholders and be responsible for broad policy decisions), and officers (who are elected by the directors to carry out day-to-day management)

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22
Q

What are some advantages of an s corporation?

A

The legal entity is financially and legally independent from its shareholders, each shareholder is financially liable only for the amount of money they invested, the shareholders’ personal assets are not at risk, the continuity of the legal entity is independent from changes in its participants, capital can be easily raised through the sale of stock, and double taxation is avoided

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23
Q

What are some disadvantages of an s corporation?

A

High costs to establish the legal entity, continuing paperwork and formal requirements to maintain the legal entity, and classification is limited to small business corporations

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24
Q

What is required of a corporation to qualify for s corporation status?

A

A domestic location and a maximum of 100 shareholders

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25
Q

What is a limited liability company (LLC) or limited liability partnership (LLP)?

A

A business type that combines the advantages of a partnership or sole proprietorship with the limited liability of a corporation

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26
Q

What are the participants in an LLC or LLP?

A

Members (who invest in the business) and managers (who manage the business)

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27
Q

Unlike partnerships, LLCs and LLPs allow non-members to be managers. True or false?

A

True

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28
Q

What are some advantages of an LLC or LLP?

A

Ease of setup, members are liable only to the extent of their investments, and the business itself is not taxed (because an LLC is not a separate legal entity)

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29
Q

What are some disadvantages of an LLC or LLP?

A

Some states may tax an LLC despite it not being a separate legal entity and members are considered self-employed and must pay self-employment taxes

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30
Q

What is a joint venture?

A

A temporary association of two or more persons or firms for the purpose of completing a specific project or goal

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31
Q

Ideally, what is a joint venture based on?

A

A formal, written agreement that describes the duties and responsibilities of each firm, how profits and losses will be divided, and how the work will be completed

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32
Q

A joint venture is treated as a legal entity independent from its members. True or false?

A

False

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33
Q

When is a teaming agreement or memorandum of understanding developed?

A

Before a joint venture is formed, in case the firms involved are awarded the project

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34
Q

What is a teaming agreement or memorandum of understanding?

A

A document that defines the roles, responsibilities, and contractual relationships that will be established if the firms involved are awarded the project

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35
Q

A teaming agreement or memorandum of understanding is not a formal business organization. True or false?

A

True

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36
Q

What is standard of care?

A

A legal concept defined as the level of skill and diligence that a reasonably prudent architect would exercise in the same community, in the same time frame, and given the same or similar facts and circumstances

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37
Q

A reasonably prudent architect designing a building in Florida would incorporate hurricane-resistant detailing. True or false?

A

True

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38
Q

Regarding standard of care, “in the same time frame” is generally taken to mean at the time of the dispute, not at the time the project is designed or built. True or false?

A

False

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39
Q

Regarding standard of care, what are some examples of “the same or similar facts and circumstances”?

A

Budget, scheduling, and project complexity

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40
Q

It is advisable for an architect’s contract to state that the project will be delivered “with the highest standards”. True or false?

A

False

41
Q

What is the most traditional work organization structure?

A

Departmental / horizontal / flat organization

42
Q

What is departmental / horizontal / flat organization?

A

Staff is organized into departments, each of which specializes in a different function

43
Q

What are some advantages of departmental / horizontal / flat organization?

A

Efficiency, the ability to standardize and fine-tune processes, fully utilizing many types of specialists, and creating economies of scale

44
Q

What are some disadvantages of departmental / horizontal / flat organization?

A

The business is inflexible and resistant to innovation and change, open communication between departments can be difficult, and employees may not gain experience or share knowledge outside of their specialties

45
Q

What is studio / vertical / tall organization?

A

Employees are organized into groups or studios, each with the responsibility and skills needed for completing an entire project

46
Q

What are some advantages of studio / vertical / tall organization?

A

Studios can be created and dissolved as needed and projects can be assigned to studios based on their particular strengths and expertise

47
Q

What is outsourcing?

A

Contracting with another company to do some of the work needed for a project

48
Q

What types of work are most often outsourced?

A

Construction document production and rendering

49
Q

What is an advantage of outsourcing?

A

Fluctuating workloads can be managed without continually hiring and firing employees

50
Q

What is a disadvantage of outsourcing?

A

Requiring careful management and coordination

51
Q

What are support staff?

A

Employees other than the professional staff and senior management

52
Q

What are some examples of support staff?

A

Administrative assistants, receptionists, bookkeepers, marketing people, model builders, and technology assistants

53
Q

All architectural businesses must conform to local, state, and federal laws and regulations, regardless of their size and organizational structure. True or false?

A

True

54
Q

What is the Employer Identification Number (EIN) used for?

A

Tax filings and correspondence with the IRS

55
Q

What are some examples of city taxes an architectural firm may be subject to?

A

City income taxes, employment taxes, occupational privilege taxes, and property taxes

56
Q

An architectural license can be renewed annually, but not biannually. True or false?

A

False

57
Q

What is the test that an architectural candidate must pass to obtain their initial license?

A

The Architect Registration Examination (ARE)

58
Q

What group administers the architectural licensing test required for initial licensing?

A

The National Council of Architectural Registration Boards (NCARB)

59
Q

What group accredits certain universities in their architectural degrees?

A

The National Architectural Accrediting Board (NAAB)

60
Q

In what program do architectural candidates work under the direct supervision of a registered architect to gain diverse experience?

A

The Architectural Experience Program (AXP)

61
Q

Through what program can architectural candidates become licensed without a formal degree?

A

The Broadly Experienced Architect (BEA) program

62
Q

What is the AIA Code of Ethics & Professional Conduct?

A

The main source of ethical standards for architects, which details minimum standards of conduct, procedures for enforcement, and sanctions against AIA members who violate the standards

63
Q

What are some examples of sanctions for AIA members found in violation of the Code of Ethics?

A

Admonishment, censure, membership suspension, and membership termination

64
Q

Some prohibitions in the original 1909 Code of Ethics have been dropped so that an architect may do what?

A

Compete for projects on the basis of fee, advertise (as long as no misleading or false statements are made), replace another architect on a project, be involved with construction, and offer free design services to secure a commission

65
Q

What are the tiers of statements in the AIA Code of Ethics?

A

Canons, ethical standards, and rules of conduct

66
Q

What are canons in the AIA Code of Ethics?

A

Broad principles of conduct

67
Q

What are ethical standards in the AIA Code of Ethics?

A

Specific goals toward which members should aspire

68
Q

What are rules of conduct in the AIA Code of Ethics?

A

Specific, mandatory statements that members must follow

69
Q

What is Canon I in the AIA Code of Ethics?

A

General Obligations

70
Q

What should AIA members do according to General Obligations?

A

Maintain and improve their knowledge and skill;
seek to raise architectural standards in aesthetics, education, research, training, and practice;
respect and seek to improve society and the environment;
exercise learned professional judgement;
uphold human rights;
and not discriminate on the base of race, religion, national origin, age, disability, or sexual orientation

71
Q

What is Canon II in the AIA Code of Ethics?

A

Obligations to the Public

72
Q

What should AIA members do according to Obligations to the Public?

A

Uphold the law;
never try to influence a public official with a payment;
never accept payments intended to influence their judgement;
never help a client with anything fraudulent or illegal;
promote and serve the public interest;
render pro bono services;
be involved in civic activities;
and strive to improve public appreciation of architecture

73
Q

What is Canon III in the AIA Code of Ethics?

A

Obligations to the Client

74
Q

What should AIA members do according to Obligations to the Client?

A

Serve their clients competently and professionally;
exercise unbiased judgement;
not accept projects beyond their professional capacity;
avoid conflicts of interest;
be truthful in professional communications;
keep clients informed about their projects;
and maintain client confidentiality

75
Q

What is Canon IV in the AIA Code of Ethics?

A

Obligations to the Profession

76
Q

What should AIA members do according to Obligations to the Profession?

A

Uphold the integrity and dignity of the profession;
practice with honesty and fairness;
not sign and seal documents for which they do not have responsible control;
not knowingly make false statements;
and be honest about their qualifications and about the work they claim credit for

77
Q

What is Canon V in the AIA Code of Ethics?

A

Obligations to Colleagues

78
Q

What should AIA members do according to Obligations to Colleagues?

A

Respect the rights of their colleagues and acknowledge their professional contributions;
provide associates and employees with suitable working conditions and fair compensation;
nurture fellow professionals through their education, internships, and careers;
and give credit to others for their professional work

79
Q

What is Canon VI in the AIA Code of Ethics?

A

Obligations to the Environment

80
Q

What should AIA members do according to Obligations to Colleagues?

A

Be environmentally responsible;
promote sustainable design in their professional work;
advocate sustainable building and site design;
and use sustainable practices within their firms and encourage clients to do the same

81
Q

What does human resource management involve?

A

Hiring, compensating, managing, and terminating employees and the legal responsibilities of having employees

82
Q

Equal employment opportunity laws make it illegal for an employer to ask a job candidate about what?

A

Age, date of birth, marital status, national origin, race, maiden name, sex, religion, and disabilities

83
Q

If an employer and employee sign a formal employment contract, what should it spell out?

A

Employee’s responsibilities, work duties, and compensation and the firm’s benefits, work conditions, termination procedures, and policies on moonlighting (accepting work from outside firms)

84
Q

What might be included in a noncompete clause?

A

Limits or prohibitions on who the employee may work for during a specified amount of time after leaving the firm, setting up a competing business in the same geographical area, working for the firm’s clients, and passing on confidential information to others

85
Q

What is employment at will?

A

Condition in which the employee works without any employment contract, can be terminated at any time without explanation, and can quit at any time without giving a reason

86
Q

What can a firm avoid by hiring an independent contractor?

A

Withholding taxes, paying benefits, and establishing an employee-employer relationship

87
Q

What should a firm do before hiring an independent contractor?

A

Verify that the independent contractor cannot be classified by the IRS as an employee

88
Q

What are the broad areas used by the IRS to determine if a worker is an employee or an independent contractor?

A

Behavioral control, financial control, and the worker-employer relationship

89
Q

What are the most important requisites for a worker to be considered an independent contractor?

A

They are hired for a specific project, they control where and how they perform their work, they provide their own supplies and equipment, they receive no benefits from the firm other than payment, and they are free to work for other firms at the same time

90
Q

What should a firm do before assigning work to an independent contractor?

A

Establish the payment amount as either a set fee or an hourly fee and verify that the worker is not financially tied to the firm

91
Q

What is compensation?

A

Any kind of payment made to employees for their work

92
Q

What are some examples of benefits a firm might provide its employees?

A

Flextime, flexible benefit packages, office-sponsored events, floating holidays, sabbaticals, flexible days off, compensation alternatives, annual performance bonuses, profit sharing, wellness, company cars, community involvement, professional dues, office amenities, continuing education, and family / medical leave

93
Q

What are performance evaluations?

A

Formal reviews performed by a manager to assess each employee’s performance

94
Q

How do performance evaluations help a firm?

A

Help the firm understand the personnel’s strengths and weaknesses, help direct hiring, help protect the firm from employees’ claims, serve as the basis for pay increases / promotions / terminations, and provide a way to direct improved employee work performance

95
Q

To be useful, performance evaluations should be based on objective, measurable criteria or on goals set jointly by the employer and employee. True or false?

A

True

96
Q

What is a quality control circle?

A

Group of employees who meet regularly among themselves and with management representatives to identify and resolve issues that affect their area of work

97
Q

A quality control circle is set up in response to an immediate situation. True or false?

A

False

98
Q

What is an Employee Stock Ownership Plan (ESOP)?

A

Method of financially motivating employees by giving them partial ownership in the firm

99
Q

What are some advantages of an ESOP?

A

Tax benefits for the firm, financing opportunities for the firm, and increased employee satisfaction

100
Q

What are some disadvantages of an ESOP?

A

Difficult to implement in small firms, requires financially and managerially stable firms, potentially complicated and expensive to set up, and requires legal advice and careful planning

101
Q

What are some examples of unacceptable behavior an employee may be terminated for?

A

Incompetence, low productivity, absences, negligence, dishonesty, sexual harassment, fraud, misappropriation of company property, insubordination, illegal activity, and noncompliance with company policies

ARE: Practice Management (6 decks)

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