PM Financial & Risk Mgmt

1) "general ledger accounting" is the 1st type of accounting an arch firm manages which includes:
2) what is the purpose of ledger accting?

1) "project cost accounting" is the 2nd type of accounting an arch firm manages which includes:
2) principals should be able to differentiate btwn projects that:
3) why is info from project cost accounting reports useful?

1) "accounts payable" is amts owed to the suppliers of good or services such as:
2) "accounts receivable" is money that others owe to the:
3) "assets" are any type of tangible or intangible resources that can be:
4) "chart of accounts" is a list of the various accts a business uses to keep track of:

5) "current assets" are resources of a business that are:
6) "direct labor" is all labor of tech. staff, principals, & support staff that is:
7) "direct personnel expense" the expense of employee salaries plus the cost of:

8) "discretionary distribution" is voluntary distribution of profits to owners & nonowners like:
8a) in what 2 ways can firms view the expense of discretionary distribution?
9) "fixed assets" are resources that the firm uses & retains for:

10) "gross revenue" is all the revenue generated by a business during:
11) "indirect labor" all labor not charged to a specific project or revenue-producing acct like:
12) "liabilities" are claims by ppl outside the business & claims by:

13) "net operating revenue" aka "net revenue" is the money that remains from billing after deducting:
14) "other assets" are miscellaneous resources like:
15) "overhead" are expenses incurred to keep a business operating whether or not:

1) the 1st type of accounting method is "cash accounting" which means:
2) the 2nd method is "accrual accounting" which means:
2a) an ex of this is if firm invoices client 50K, this $ is listed as revenue, but the client has not paid the invoice yet

1) what are the advg's of cash accting?
2) what are the advg's of accrual accting?
3) what type of firm does the IRS req. to use accrual accting?

1) typ arch firms use a slight variation of the accrual method called the "modified accrual basis method" which:
2) what does the modified accrual not include?
3) in both cash & accrual accting, revenue & expenses are grouped into individual accts for:
4) separate expense accts are kept for:

1) accrual accting uses "double-entry bookkeeping" which means:
2) info entered into journals & ledgers generates a:

1) a "balance sheet" summarizes:
2) all listed assets must = all:
3) "net worth" of a firm is the:
4) "owner's equity" is the money:
5) in summary, total assets on a balance sheet must =

1) a "profit & loss statement" aka "income statement" lists all the:
2) a "cash flow statement" shows:
3) "cash equivalents" are:

1) why are cash flow statements important?
2) how can project managers & firm mgmt track the progress of each job separately?

1) "financial mgmt" includes:

2) *what is the most fundamental equation for financial planning in a profit-oriented business?

1) how is ctrling expenses handled?
2) one of highest % of overhead is for:
3) increasing revenue is done by 1 of 2 things:
4) for an arch firm, the "project progress report" is so important b/c:

1) what else does a project progress report show?
2) an "office earnings report" summarizes ea. of the firm's projects via:

1) an "aged accounts receivable report" shows the status of:
2) when does an invoice need extra attention?
3) in arch firms, avg collection period for invoices is:
4) if an invoice is older than 90 days:

1) a "time analysis report" lists:
2) the most important info generated from a time analysis report is:

1) what is the break even pt & or min allowed chargeable ratio for whole firm?
2) for technical & professional staff what should be the ratio?
3) what is the chargeable ratio for principals?

1) a "current ratio" is the total current:
1a) ^ what is a healthy business ratio & the min accepted level?
2) a "net profit before tax" means:

1) an "overhead rate" is the total office overhead (or total indirect expenses) divided by:
1a) when using ^ this to calc fees, the ratio is multiplied by the:
2) a "quick ratio" is a refinement of the current ratio including:

1) how does the quick ratio compare to the current ratio?
2) "revenue per technical staff" is the amt:
2a) ^what is this # used to estimate?
2b) if a firm's operating revenue is known, revenue per technical staff can be used to estimate:

1) "revenue per total staff" is the amt of:
1a) this ratio is the annual net operating revenue divided by:
1b) it can be used in the same way as:

1) what is the most common method of setting a fee?
(see ch 5 for more info)
2) if a client asks for a stipulated lump sum fee proposal, how is it determined?

1) billing rates are determined based on:
2) ^calcs are simplified w/ a "net multiplier" found by:
3) the net multiplier accts for:
4) at most arch firms the net multiplier is:
ex- firm using net multiplier of 3, if an employee is paid $40/hr, billing rate to client for that employee is $120/hr

1) the "break-even rate" is total cost of operations divided by:
2) ^ this rate accts for what?
3) b/c the recommended overhead rate is 1.3-1.5, break-even rate should be:
4) to determine the min hourly fee charged to client:

1) "direct personal expense" (DPE) means:
2) the multiplier is calc'd to acct for:
3) b/c of the inclusion of benefits in DPE:

1) the next step in setting up fees after hourly rates are est. for all employees is:
2) to get the total estimated fee what is multiplied?
3) in addition to hourly fees, what other costs must be added in to total project budget?

1) typ firms use past projects to develop:
2) 2 other approaches to setting fees are:

1) what are the 4 basic steps to collecting accounts receivable (aka paid for services rendered)?
2) before work starts, what is fundamental about fee?
3) contracts should include what about fee:

1) contracts should include provisions for nonpayment like:
2) who should be consulted in the contract language?
3) when & what frequency should invoices be sent?

1) what info should be clearly listed on an invoice?
2) why should an invoice w/ no back up info not be submitted to client?

1) although invoice formats depend on the firm's method of operating/ tracking time & the cond.'s in contract, what are examples?
2) follow up for no payment on an invoice should occurr:

1) additional actions for unpaid invoices can be taken after:
2) what can a firm do if policies aren't fully stated in contract?

1) what should a firm keep regarding collections?
2) at the beginning of a project, verify the client's billing:
3) who should sign off on invoices?
4) what is the best approach for collecting fees?

1) use project accting software that develops:
2) it is important to be familiar w/ the client's payment procedures b/c:
3) use accting software that develops:

1) all invoices should include name & tele # of firm contact b/c:
2) sometimes offering a 1-2% discount for payment made w/in 2 weeks prevents:

1) req. a (__) before work starts that can range from (__) to (__) of the fee
2) if a project is to last more than a year, include provisions in the contract to:

1) beware of client "delaying" tricks like:
2) what can be filed against the client's project if necessary & who should be consulted?

1) other than the fact that overhead expenses don't produce revenue, why is it beneficial to keep them low?
2) what is the largest overhead expense?

1) who can surprisingly be the worst offenders of charging their time to nonbillable categories?
2) what are some non-labor direct expenses firms should acct for?
3) rather than billing all non-labor to gen. overhead, firms need to keep accurate records of:

EX OF NON-LABOR DIRECT EXPENSES TO BILL TO CLIENT
1) progress prints made during the course of the job
2) all copy machine reproduction
3) computer expenses charged by an outside company

CONT' WAYS TO CTRL OVERHEAD EXPENSE
1) shop around for best prices on tele service, internet, oth commun. service
2) reevaluate firm's office location, is the firm spending extra for a location that doesn't benefit the business, is the space used efficiently or is there too much

1) what is the legal concept of "agency"?
2) in arch. & const. who is the agent, principal, & third party?
3) legally, when agent consents to act on behalf of & rep. interests of principal, the agent is empowered to:

1) to avoid blame from either contractors or owners, arch's must be careful to:
2) what doc.'s attempt to min. potential problems by clearly defining duties/responsibilities of various parties?
3) what must be signed by owners & arch's?
4) contractors are considered to be "vendors" which means:

1) "duties" are how the law defines what one person:
2) the 1st way "duty" is est. for arch's is by the:
3) standard forms of agreement est. by the AIA outline the:

1) the 2nd way duty is est. is by:
2) the 3rd way duty is est. is by:
2a) when situations arise that aren't covered by contracts & gen. cond.'s arch's cannot act:

EX OF IMPLIED DUTIES
1) "cooperating w/ contractors" - only some actions are stated in contracts
2) "not interfering w/ the contractor's work" - anything causing delay / additional cost / cause contractor to modify standard methods of const.

1) what is "liability"
2) one important way arch's can become liable is through:
3) what are the 3 cond.'s that must be met for an arch. to be found negligent?

1) b/c arch's rep. themselves as having special knowledge & skill, the law holds such professionals:
2) arch's are expected to follow the "standard of care" which means:

DEFENSE OF CLAIMS
1) concept of "betterment" can apply to claims of:
2) ^ ex - client originally approves wd paneling, but arch mistakenly shows a ptd finish, a change order would be needed, how does the arch handle this?

DEFENSE OF CLAIMS
1) what is a "statute of limitations"
2) ^ ea. state varies, but the gen. time limit is:

DEFENSE OF CLAIMS
1) a "statute of repose" is sim to statute of limitations, but the time limit is usually much:
2) ex- claim 3 yrs from discovery w/ cutoff 6 yrs from completion, so if client discovers problem 5 yrs after completion:

MANAGING RISK STRATEGIES
1) "know the client" don't accept a client whose unknowledgeable about const., expects too much, poor payment history, history of litigation
2) "use well-written contracts & follow them thoroughly" either use AIA's that are written from exp. & coordinated w/ ea. oth or use attorney to write one or review the clients

MANAGING RISK STRATEGIES
5) "maintain an active quality ctrl program" -est. well-defined program & objectives for ea. project, use standard checklists & procedures, use proven const. methods, details, specs, maintain comm. btwn arch, const. team, clients, everyone in firm should understand contractual obligations/ responsibilities

THIRD-PARTY CLAIMS
1) what is the concept of "privity"
2) which doc. clearly states privity rules
3) what is an "indemnification clause"

1) when would a court not support enforcing the indemnification clause?
2) way arch can min. 3rd party claims begins with:

MIN. 3RD PARTY CLAIMS BY:
1) don't include language in contract that states/implies responsibility to provide:
2) don't give directions concerning methods of const. b/c this can imply:
3) pt out obvs const. safety problems to contractors, & follow up w/ (___) & if not corrected suggesting that:

COPYRIGHT
1) the 1st of 2 categories copyright falls into is the "traditional one," it includes:
2) the 2nd category of copyright was est. under "The Architectural Works Copyright Protection Act," which applies to bldgs after year:

COPYRIGHT
1) the 2nd copyright category includes:
2) ^b/c of the abv, a bldg owner cannot:
3) a "derivative work" is a bldg designed:

1) gen. the arch owns the copyright unless:
2) what does the Owner-Arch Agreement AIA Doc B101 "Standard Form of Agreement Between Owner & Arch" state
3) who should the arch register the work with?

COPYRIGHT
1) what does registering a copyright allow the arch to do?
2) when should registration be made by?
3) b/c the arch grants the owner a license to use the instruments of service, the owner cannot cont. to make use of the arch's instruments of service w/out:

COPYRIGHT
1) how does the owner get a copyright?
2) if the arch grants the owner a license:

INSURANCE
1) what should arch's, owners, & contractors all have?
2) the AIA Doc B101 of the owner-arch agreement, req's arch's to maintain what in regard to insurance?

INSURANCE
1) "prof liability insurance" (aka malpractice / errors & omissions insurance) protects arch's in case:
2) ^ what does the abv exclude?

INSURANCE
1) "gen. liability insurance" is a range that protects against claims of:
2) sometimes an arch buys this insurance to protect against possibility that:
3) "property insurance" protects the arch's bldg & contents against:

INSURANCE
1) "personal injury protection" protects arch's against charges of:
2) what is a "tort?"
3) "automobile insurance" covers liability & property damage to vehicles:

INSURANCE
1) "workers' compensation" protects employees in the event of:
2) what is unique about the abv ^?
3) what are some oth types of insurance arch's may carry?

OWNER'S INSURANCE
1) the AIA Doc A201 "Gen. Cond's of the Contract for Const." req's the owner to carry:
2) what does the requirement from abv^ protect against?

OWNER'S INSURANCE
1) the "Gen. Cond's" also req's the owner to carry insurance for:
2) the owner insurance policy cannot be the "specified peril" type but rather:
3) if the property insurance req's deductibles, any costs not covered b/c of them are:

CONTRACTOR'S INSURANCE
1-4) the "Gen. Cond's of the Contract for Const." req's contractors to carry insurance that protects from claims such as:

CONTRACTOR'S INSURANCE
5-8) the "Gen. Cond's of the Contract for Const." req's contractors to carry insurance that protects from claims such as: