PCM - Practice Management Flashcards

Question

What is G702?

Answer 1

Application and Certificate for Payment

Answer 2

Continuation Sheet

Answer 3

Certificate of Substantial Completion

Answer 4

establish a working relationship, typically in order to cooperate on a matter of mutual concern.

Answer 5

remember IMAL. Initial Decision Maker (IDM) / Mediation / Arbitration / Litigation

Answer 6

The National Labor Relations Act (the Wagner Act), the Wages and Fair Labor Standards Act (FLSA), the Employee Retirement Income Security Act (ERISA), and the Occupational Safety and Health Act of 1970 (OSHA)

Answer 7

Criminal, Civil

Answer 8

A project Zoned for Residential

Answer 9

A written law passed by a legislative body

Answer 10

3 parties: principal, agent, and a third party.

Answer 11

When tax rates favor the individual over the corporation, it is beneficial to form an S corporation. It also avoids the tax on corporate income. The profits and losses of the business are instead passed through the business and noted on the owners’ personal tax returns. S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level. To qualify for S corporation status, the corporation must meet the following requirements: Be a domestic corporation Have only allowable shareholders May be individuals, certain trusts, and estates and May not be partnerships, corporations or non-resident alien shareholders Have no more than 100 shareholders Have only one class of stock Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

Answer 12

As required As Necessary Hold Harmless Indemnification

Answer 13

Hold Harmless and Indemnification

Answer 14

Tail Insurance

Answer 15

Automobile accidents Automobile accidents are among the biggest risks for a practice. The owner may require the firm to have automobile liability insurance covering the architect's personal car or taxi so that the owner does not get dragged into a lawsuit involving a collision.

Answer 16

General liability insurance

Answer 17

Professional liability insurance

Answer 18

Workers compensation insurance

Answer 19

Business interruption insurance

Answer 20

Intellectual property insurance

Answer 21

General liability insurnace

Answer 22

Disciplinary, regulatory, or administrative expense liability insurance DRA: ADA, OSHA, FHA

Answer 23

Deductible

Answer 24

What you pay every month or every six months as a bill to be insured

Answer 25

the maximum amount paid by the insurance company per policy.

Answer 26

a demand made by the insured for the insurance company to pay out.

Answer 27

(Number of stories x Floor area per story) / Lot Area

Answer 28

rentable area divided by the usable area. Should be a number above 1 The higher the grossing factor, the less efficient the space.

Answer 29

Locker room 1.1 classroom 1.5 Hospital 1.75

Answer 30

Base Salary - Direct Salary

Answer 31

Direct Salary * Direct Salary Expense Multiplier

Answer 32

Base Salary * Chargeable Rate Percentage

Answer 33

Hours per year x Chargeable Rate Percentage

Answer 34

Chargeable hours/ Hours/ year

Answer 35

Base Salary / Hours/ Year

Answer 36

Base Salary / Hourly Rate

Answer 37

Hours/ Year x Hourly Rate

Answer 38

Total Overhead Expenses/ Total direct salary expenses = overhead multiplier Indirect Sal+ Bennies + Overhead

Answer 39

(Total Overhead + Total Direct Salary) / Total Direct Salary

Answer 40

Hourly Rate X Overhead Multiplier

Answer 41

Total Direct + Indirect Salary Expenses + Total Overhead + Total Profit

Answer 42

Target revenue/ Total Direct Salary

Answer 43

Total Indirect Salary + Total Employee Benefits + All other overhead expenses

Answer 44

Total direct salary expenses/ total base salaries

Answer 45

Utilization Rate x Direct Salary Expense Multiplier = Revenue Factor

Answer 46

Design-Bid-Build

Answer 47

Two entities sharing profits, losses, and everything. The two companies act as a single entity.

Answer 48

WHen two entities come together to create a third company that is owned by the two parent companies.

Answer 49

a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves).

Answer 50

Earned value (Amount you have been paid) divided by the planned value (Amount that theoretically should have been paid commensurate with the amount of work completed)

Answer 51

Found in AHPP Money you have to actually run your firm What you have after subtracting the following: -Consultant Fees -Reimbursables -(Project related expenses, cannot get reimbursed for) Lease, everything you need to keep the lights on.

Answer 52

If you are working on a project, and its billable, its direct labor Time and hours or dollars charged to a project, invoiced or not, total compensation for an employee.

Answer 53

Time spent not working on projects

Answer 54

AHPP: Formula: direct labor hours ÷ total labor hours × 100 (as a %) Example: 32 hours ÷ 40 hours = 80% Utilization rate: Measures the overall effi ciency and effective use of labor, not a measure of productivity. This also is not a measure of the number of hours billed, only hours charged to projects. Hyperfine: Ratio of direct hours charged to a project to the total hours reported Time worked on project divided by How much time altogether

Answer 55

AHPP Formula: total indirect expenses ÷ total direct labor (in $$$) Example: $308,241 ÷ $200,914 = 1.53 (for an hourly salary of $10/hr., the overhead cost would be 1.53 × $10 = $15.30) Overhead rate: Measures the cost of operations not directly attributed to projects. HF: Ratio of indirect expenses to total direct labor The cost of doing business. For every $ that you pay your employees how much do you need to pay to keep the lights on?

Answer 56

AHPP: Formula: overhead rate + 1.00 (represents the unit of cost for an hour of salary) Example: 1.53 + 1.00 = 2.53 (for an hourly salary of $10, the break-even cost would be 2.53 × $10 = $25.30) Break-even rate: Measures the total cost of operations for every dollar spent on direct labor. HF: Overhead rate + unit cost of 1.00/ hour of salary

Answer 57

AHPP: Formula: net operating revenue ÷ total direct labor (in $$$) Example: $622,207 ÷ 200,914 = 3.1 Target: Greater than break-even rate (industry benchmark: 3.0+) Net multiplier: Measures the revenue generated for every dollar spent on direct labor. This indicator must be greater than break-even rate for a net profi t to be realized.

Answer 58

UR: Utilization Rate OR: Overhead Rate BER: Break Even Rate NM: Net Multiplier PER: Profit-to Earnings Ratio NRE: Net Revenue Per Employee AAR: Aged Accounts Receivable

Answer 59

Revenue earned and billed from fees and expenses, including outside project consultant fees and expenses, plus all other direct and indirect expenses incurred. This means revenue is based only on invoiced fee and expense amounts sent and/or received. Most fi rms use this modifi ed accrual-basis for their profi t-loss statement and balance sheet development.

Answer 60

Income received and all salaries and expenses paid (a checkbook approach). This is the basis most commonly used for fi ling and paying quarterly and year-end taxes.

Answer 61

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

Answer 62

Same as direct salary. Represents time charged to projects, whether invoiced or not (by everyone, including principals).

Answer 63

Same as indirect salary. Time charged to non-project-related activities (by everyone, including principals). Note: Indirect labor is included in the calculation of total indirect expenses.

Answer 64

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.

Answer 65

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

Answer 66

General and administrative non- project-related operating expenses (total indirect expenses includes indirect labor).

Answer 67

The ratio of total indirect expenses to total direct labor.

Answer 68

The overhead rate plus the unit cost of 1.00 for an hour of salary (example: overhead rate of 1.30 + 1.00 = break-even rate of 2.30). This means for every $1.00 of salary the fi rm must recapture $2.30 just to break even.

Answer 69

Direct labor expressed as a percentage of total labor. (For individual rates, use hours; for a fi rm rate, use dollars.)

Answer 70

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

Answer 71

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.

Answer 72

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

Answer 73

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

Answer 74

Cash Basis Report + (Modified) Accrual-Basis Report (C&A Reports)

Answer 75

The Cash that remains after all liabilities are subtracted

Answer 76

AHPP Formula: net profi t (before distributions and tax) ÷ net operating revenue Example: $108,817 ÷ $622,207 = 17.49% Measures the fi rm’s effectiveness in generating a net profi t (as a %).

Answer 77

AHPP Formula: annual net operating revenue ÷ total number of employees Example: $622,207 ÷ 6 employees = $103,701 per employee Net revenue per employee: Measures the revenue earnings for each employee. Based on targeted net profit, this indicator contributes to the establishing of the net operating revenue in the coming year’s annual budget.

Answer 78

AHPP Formula: average annual accounts receivable ÷ (net operating revenue ÷ 365 days) = calendar days before pay-ment is received Example: $245,090 ÷ ($622,207 ÷ 365 = 1,705) = 144 calendar days Aged accounts receivable: Measures the average time interval in days between the date of outstanding invoices and the date payment is received.

Answer 79

60% Principals and Architects should be at 75%

Answer 80

2,080: Yes, you will need to know this!

Answer 81

HF: The money due to the firm for its delivered services but not yet paid by clients.

Answer 82

HF: A report that shows a company’s accounts receivable according to how long an invoice has been outstanding (typically in 30 day segments).

Answer 83

HF: The list of current projects that will carry over to the following year, as well as the dollar value of anticipated revenues from projects contracted but as yet unearned.

Answer 84

HF: Measures the total cost of operations for each dollar spent on direct labor.

Answer 85

HF: Cash and other resources that are reasonably expected to be realized in cash or sold/consumed in the business within one year of the balance sheet date or the firm’s operating cycle, whichever is longer.

Answer 86

HF: The difference between all revenues and expenses on the income statement for the current year (after distributions and taxes have been deducted).

Answer 87

HF: A debt that can be reasonably expected to be paid from existing current assets or the creation of other current liabilities within one year or the operating cycle.

Answer 88

HF: Project-related expenses that are not reimbursable and project-related expenses included in all lump sum fee contracts.

Answer 89

HF: Wages or salaries billable to a specific project and client.

Answer 90

HF: The amount of money invested by the owner in the business minus any money taken out by the owner of the business.

Answer 91

HF: General and administrative non-project related expenses.

Answer 92

HF: Wages that are not billable to a specific project.

Answer 93

HF: Measures a firm’s ability to manage debt effectively.

Answer 94

HF: Measures a firm’s ability to pay obligations that are expected to become due within the next year

Answer 95

HF: Obligations expected to be paid after one year or an operating cycle, whichever is longer.

Answer 96

HF: Shows the revenue generated by the firm expressed as a percentage (or multiple) of total direct labor.

Answer 97

HF: Net revenue after deducting consultant fees and expenses, all reimbursable and non-reimbursable project expenses. NOR = Gross Revenue - Consultant Fees - Project Related expenses

Answer 98

HF: The excess of revenues over expenses and is a key indicator of profitability.

Answer 99

HF: Measures roughly how much money each employee generates for the firm.

Answer 100

HF: Measures the cost of operations not directly billable to a project.

Answer 101

Measures the firm’s effectiveness in generating profit.

Answer 102

HF: Measures the profitability from the stockholders’ viewpoint (Net Income / Avg. Stockholders’ Equity)

Answer 103

HF: A method used to calculate firm sales and profit goals

Answer 104

HF: Used to check the balance between revenue and labor, and shows how well a firm is generating revenue from its total labor investment.

Answer 105

HF: The sum of total gross cash expenditures of the firm during the accounting period.

Answer 106

HF: The sum of direct labor and indirect labor (in time). If measured in dollars, it is also called total salary.

Answer 107

HF: Measures the overall efficiency and effective use of labor.

Answer 108

HF: Protects against events that cause harm.

Answer 109

HF: Care Insurance a company provides for vehicles used for work trips even if they don't own a vehicle.

Answer 110

HF: Protects employees wo get injured while on the job

Answer 111

HF: Protects the company against claims made by employees

Answer 112

HF: Also known as E&O, this is the big one protecting against things that go wrong because of your drawings and specifications.

Answer 113

Canons, Standards and Rules of Conduct. Canons are general guiding principles. These list the stakeholders to which architects have an obligation. Standards are specific goals for the profession. Rules of Conduct are actual rules you have to follow. I think you are most likely to encounter the Rules of Conduct on an exam. See AHPP pg 4 for all this stuff.

Answer 114

General Obligations Obligations to the Public Obligations to the Client Obligations to the Profession Obligations to Colleagues Obligations to the Environment

Answer 115

Competence Conflict of Interest Full Disclosure Compliance with Laws Signing and Sealing Documents

Answer 116

AMBER Overhead Multiplier = Total Overhead Expenses/ Total direct salary expenses For every dollar the firm pays its employees doing billable work, there is an additional X amount in expenses for the firm

Answer 117

AMBER Overhead rate = Hourly Rate X Overhead Multiplier

Answer 118

AMBER (Total Overhead + Total Direct Salary) / Total Direct Salary what would be the multiplier for the hourly rate would be so that the money charged to the client will equal the cost to the firm (overhead and salaries)

Answer 119

AMBER Utilization Rate X Direct Salary Expense Multiplier

Answer 120

AMBER Total Direct Salary Expenses / Total Base Salaries

Answer 121

HF: Aged accounts receivable = average annual accounts receivable / (net operating revenue / 365 days)

Answer 122

Return on Overhead = Net Profit / Indirect Expenses

Answer 123

Cash Based Cash-basis tracks actual cash in and cash out. Because money isn’t usually received at the same time money is paid (salaries, etc) there is no time component to this method.

Answer 124

Accrual Based

Answer 125

Mediation -is a form of refereed settlement -Required First step -A mediator does not make a decision or judgement about the issue. -The goal of mediation is to facilitate a conversation between the parties and have them come to an agreement themselves. - Arbitration -No Right to Discovery -Result is Binding -Faster than Litigation -once the arbitrator decides the dispute, the parties cannot go to court and litigate it or have it decided by another arbitrator. -No Right to Appeal - Litigation -Right to Discovery -Result is Binding -Decision rendered by Jury, who likely have no experience with the subject. -

Answer 126

the joining together of several lawsuits or several parties all in one lawsuit, provided that the legal issues and the factual situation are the same for all plaintiffs and defendants. When there is a legal dispute, a joinder consolidates the parties together in one proceeding.

Answer 127

This malleable document calculates all the variables that go into putting a deal together with the intent of giving you the ability to make informed decisions regarding the project's expected financial performance

Answer 128

Corporation, LLC, & LLP Limited liability company, limited liability partnership

Answer 129

Breech, Damage, Duty

Answer 130

True! No need to register with any patent agency or anything.

Answer 131

Vicarious Liability

Answer 132

statute of repose. A statute of repose extends beyond a statute of limitations

Answer 133

The statute of limitations is a deadline for filing a claim once the cause for the claim is discovered.

Answer 134

Owners will select this method if cost is the primary factor in their decision.

Answer 135

Owners will select this method if risk is the primary concern.

Answer 136

acts only as a constructability and cost management consultant to the owner during the design and construction process, but will not build the building. CM-adviser projects can be delivered under any of the methods previously described.

Answer 137

The CM as agent provides early consulting and may act on behalf of the owner in assembling and coordinating the construction trades prior to and during construction. CM-agents typically provide their services for a fixed fee and assume no risk for the actual construction costs themselves but pass on both savings and overruns directly to the owner.

PCM - Practice Management Flashcards

(165 cards)