PcM practice quiz
Here you can take our Practice Management quizzes to help you study or if you’re simply wanting to keep your skills sharp.
We’re no longer posting new quiz questions to this channel but we will be releasing Practice Management quizzes in our subscriptions later this year.
Question 8:
3/9/2020
A group of recently licensed architects start a new firm and apply for professional liability insurance coverage. The application asks if the firm’s practice will engage in the design of condominiums.
Why would the insurance carrier want to know this?
A. Because condominium projects allow for higher design fees and the insurance company wants their share
B. Because the contractors who build condominium projects aren’t as sophisticated as other contractors and make more errors
C. Because recently licensed architects should stick to smaller buildings like duplexes and park shelters, not condominiums
D. Because any errors in the design will be multiplied across several units and owners can join efforts to seek damages
Answer: (Click blurred text to reveal)
The answer is D. Because any errors in the design will be multiplied across several units and owners can join efforts to seek damages.
Condominium projects are known for carrying higher risk to architects and this is often reflected in the practices of the insurance companies who insure architects.
Ref: The Architect’s Handbook of Professional Practice
Question 9:
3/16/2020
A developer hires an architecture firm to prepare a set of plans. The project is an office building on a suburban site. They use AIA B101 for the owner-architect agreement. The building is constructed and then leased.
Three years later, the architecture firm discovers that the developer reuses the same set of plans to build three other identical office buildings on other sites in the same city. The architect is not aware of the three later projects.
Which statement is true regarding this scenario?
A. Since the developer paid for the design, they may use it as they like
B. The developer may reuse the plans but only if they change it enough so as to not violate copyright laws
C. Based on the B101, the architect transfers the copyright of the plans to the owner
D. The architect owns the rights to the plans and the actions of the developer are in violation of those rights
Answer: (Click blurred text to reveal)
The answer is D. The architect owns the rights to the plans and the actions of the developer are in violation of those rights.
Based on the B101, the architect retains the rights to the plans and grants the owner a non-exclusive license to use the plans. The developer should ask the copyright holder before reusing the plans.
Ref: Law for Architects, AIA B101
Question 10:
3/23/2020
The ability to meet financial obligations as they are due is an important aspect of running a successful business.
What is the name given to this?
A. Profitability
B. Liquidity
C. Projections
D. Solvency
Answer: (Click blurred text to reveal)
The answer is D. Solvency.
Solvency is the ability of a firm (or an individual) to pay its bills. In order to be solvent, a firm must have enough assets to cover their liabilities.
Profitability is closely related to solvency but profitability specifically refers to the ability to create more revenue than expenses. Liquidity is the ability to easily use assets in the form of cash. For example, you might own computers which have a value, but that value is not in cash and is therefore not liquid. Projections are cash flow forecasts.
Ref: The Architect’s Handbook of Professional Practice
Question 11:
3/30/2020
Refer to the exhibit of the typical billing cycle for an architecture firm that bills after each phase of design services.
Which label belongs in the empty box?
A. Accounts receivable
B. Accounts payable
C. Collections
D. Balance sheet
Answer: (Click blurred text to reveal)
The answer is A. Accounts Receivable.
Accounts receivable is an account in the general ledger. It is where the amount owed to the company by their clients for services rendered and billed but not yet paid is recorded.
Ref: The Architect’s Handbook of Professional Practice
Question 12:
4/6/2020
An architecture firm is reviewing their marketing strategy. The firm was established 24 years ago and does a wide variety of work in the commercial sector. They are one of about ten prominent firms in their city of about 300,000 people.
What should be their number one priority?
A. Securing new clients through networking
B. Seeking out new markets such as institutional or residential
C. Researching the competition’s weaknesses
D. Maintaining relationships with existing clients
Answer: (Click blurred text to reveal)
The answer is D. Maintaining relationships with existing clients.
Maintaining relationships with existing clients is the best answer. This is because repeat clients and their architects have usually built a relationship of trust and respect. Establishing new relationships is difficult, time-consuming, and costly, especially if the client already works with another architect.
Choices A and B are not the best answer because there are difficulties and costs associated with these routes. Choice C is not the best answer because while knowing the competition can help the firm position themselves in the market, it is not a priority over maintaining relationships with existing clients.
Ref: The Architect’s Handbook of Professional Practice
Question 13:
4/13/2020
A senior licensed architect is the studio manager at a large firm. They are in charge of a team of 11 other staff members including architects, drafters, and designers. They would like to lead their team by inspiring growth and change in the individual team members.
What leadership skills or traits should they strengthen to accomplish their goal?
A. Technical ability and expertise
B. Communication and interpersonal skills
C. Ability to read and adapt to different situations
D. Time management and task delegation
Answer: (Click blurred text to reveal)
The answer is B. Communication and interpersonal skills.
Inspiring growth and change requires listening to and learning from team members. These skills are especially relevant in a creative field such as architecture.
Choice A is not the correct answer because while technical ability and expertise are important for leaders to have, they don’t speak to the question which asks about inspiration and transformation of team members. Choice C is incorrect because while the ability to read and adapt to different situations is important and closely related to inspiring and transforming others, it is not the best answer because like answer choice A, it does not speak to transformation and growth of the team members. Choice D is incorrect because it focuses on functional aspects of project management (telling them what to do) rather than team member development.
Ref: The Architect’s Handbook of Professional Practice
Question 14:
4/20/2020
An architecture firm’s employees and each employee’s annual compensation and percent chargeable is listed below:
Principal : $180,000 : 40%
Architect #1 : $120,000 : 65%
Architect #2 : $85,000 : 80%
Intern Architect : $45,000 : 95%
Technician #1 : $55,000 : 98%
Technician #2 : $35,000 : 98%
Administrative Assistant : $40,000 : 20%
What is the utilization rate of the firm as a whole? Round to the nearest percent.
___%
Answer: (Click blurred text to reveal)
The answer is 64%.
The answer is 64%. The utilization rate or chargeable ratio is the percentage of time or dollars charged to projects.
You must find both the firm’s total salary expense and the direct labor expense.
Total salary expense: $180,000 + $120,000 + $85,000 + $45,000 + $55,000 + $35,000 + $40,000 = $560,000
To find the direct labor expense, first take the salary times the employee’s utilization rate.
Principal : $180,000 x 0.4 = $72,000
Architect #1 : $120,000 x 0.65 = $78,000
Architect #2 : $85,000 x 0.8 = $68,000
Intern Architect : $45,000 x 0.95 = $42,750
Technician #1 : $55,000 x 0.98 = $53,900
Technician #2 : $35,000 x 0.98 = $34,300
Administrative Assistant : $40,000 x 0.2 = $8,000
Add them up to get the total direct labor expense: $72,000 + $78,000 + $68,000 + $42,750 + $53,900 + $34,300 + $8,000 = $356,950
Now find the utilization rate by dividing the direct salary expense by the salary expense.
$356,950 / $560,000 = 0.637 or 64%
Ref: The Architect’s Handbook of Professional Practice
Question 15:
4/21/2020
In this type of business structure, the owner’s salaries are deductible by the company and taxed at the individual level. The company is also taxed as a separate entity.
How is this business structure identified?
A. S-Corporation
B. Corporation
C. Limited Liability Company
D. Partnership
Answer: (Click blurred text to reveal)
The answer is B. Corporation.
Corporations are taxed once as a company and again at the individual level. This is known as double taxation.
The other three choices have what is known as pass-through taxation where the company itself pays no income tax, but the individuals who own the company pay income tax on their personal tax returns. The tax burden is said to pass-through to the individual.
Ref: The Architect’s Handbook of Professional Practice
Question 16:
5/4/2020
An architecture firm is putting together construction documents in preparation for plan review at a municipal building department that is not local to them. The project is complex and the design team is not familiar with the local building department. They would like to hire a specialist who can help with the plan review process.
Which of the following should the architect consider hiring?
A. Civil engineer
B. Attorney
C. Expeditor
D. Construction manager
Answer: (Click blurred text to reveal)
The answer is C. Expeditor.
Expeditors specialize in the processes of filing with and gaining approval from building departments and other regulatory agencies.
Ref: Professional Practice, A Guide to Turning Designs into Buildings
Question 17:
5/11/2020
A firm realizes the quality of their construction documents could be improved.
Who is responsible for quality management?
A. Document production team
B. Project manager
C. Quality control manager
D. All of the above
Answer: (Click blurred text to reveal)
The answer is D. All of the above.
Excellence is the result of a well-managed team where ALL members engage in quality management.
Ref: The Architect’s Handbook of Professional Practice
Question 18:
5/18/2020
Which of these licenses architects?
A. ICC
B. Jurisdictions
C. AIA
D. NCARB
Answer: (Click blurred text to reveal)
The answer is B. Jurisdictions.
The purpose of licensing architects is to protect the health, safety, and welfare of the public. Jurisdictional governments - the 50 states, Washington DC, and four overseas territories, license architects through professional licensing laws that regulate what people are allowed to call themselves and what they are allowed to do. Licensing establishes a minimum level of training, experience, and character to be qualified to offer professional services to the public.
Ref: The Architect’s Handbook of Professional Practice; The Project Resource Manual: CSI Manual of Practice
Question 19:
5/25/2020
A new architecture firm is reviewing insurance policies.
Which type of insurance protects the firm from litigation alleging malpractice or negligence?
A. Disability
B. General liability
C. Professional liability
D. Property
Answer: (Click blurred text to reveal)
The answer is C. Professional liability.
Professional liability insurance is also known as Errors and Omissions (E&O) insurance. This type of insurance protects practicing architects from claims against acts of alleged negligence, errors, and omissions while performing architectural services.
Ref: The Architect’s Handbook of Professional Practice
Question 20:
6/1/2020
A client would like to structure their construction project with a Construction Manager as an adviser.
In order for this to be successful, the owner should be experienced in which of the following?
A. Programming and design
B. Bidding and negotiation
C. Preconstruction services
D. Contract administration
Answer: (Click blurred text to reveal)
The answer is D. Contract administration.
A project structured with a construction manager as adviser (CMa) incorporates an additional prime player, the construction manager, on the construction team in addition to the architect and general contractor. Often, there are also multiple prime contractors. In this type of delivery, the construction manager acts as an independent adviser through the course of both design and construction. Since the owner has an additional player, the roles and responsibilities among the construction team members are likely to overlap and be less well-defined. Thus for a smooth project, it follows that the owner should be experienced in administering the various roles and responsibilities of the construction team players.
Ref: The Architect’s Handbook of Professional Practice; A132–2019, Standard Form of Agreement Between Owner and Contractor, Construction Manager as Adviser Edition
Question 21:
6/8/2020
Licensed architects are held to ethical standards that guide professional behavior. The profession of architecture has two such standards, the AIA Code of Ethics and Professional Conduct and NCARB Model Rules of Conduct.
Which scenarios are in violation of the ethical standards for architects? Select the two that apply.
A. A local branch of the AIA publishes and distributes recommended fee schedules
B. An architect withholds information to protect the building owner against a known violation of a building code
C. The employees of an architecture firm enjoy an expensive dinner provided by a representative of a window manufacturer
D. An architect accepts payment from a cedar siding supplier with full disclosure to the architect’s client
E. A young architect performs pro bono work for non-profits in order to build a portfolio of work
F. An architect obtains a general contractor’s license and begins offering general contracting services
Answer: (Click blurred text to reveal)
The answers are:
A. A local branch of the AIA publishes and distributes recommended fee schedules
B. An architect withholds information to protect the building owner against a known violation of a building code
Choice A is a violation of Rule 4.1 of NCARB’s Model Rules of Conduct and Rule 2.101 of AIA Code of Ethics and Professional Conduct says that architects must not knowingly violate the law. The law in this scenario is the Sherman Antitrust Act which works to outlaw business monopolies and promote competition in the marketplace. Choice B is a violation of Rule 3.5 of NCARB’s Model Rules of Conduct and Rule 2.105 of AIA Code of Ethics and Professional Conduct that say that in the event an architect is made aware of a decision by a client that violates building laws and regulations that the architect must refuse consent of the decision and report it to the authorities.
Choice C is not a violation of ethical codes in the profession of architecture. Choice D is not a violation of ethical code as long as the kickback payment is disclosed to the client. Choice E is not a violation of ethical codes in the profession of architecture and pro bono work is actually encouraged by the AIA code of ethics. Choice F is not a violation of ethical codes in the profession of architecture.
Ref: The Architect’s Handbook of Professional Practice; NCARB Model Rules of Conduct; AIA 2018 Code of Ethics and Professional Conduct
Question 22:
6/15/2020
An architect and a project owner get into a dispute over what is entailed in the scope of work for a contract to design a new commercial building. They agree to go to mediation in order to attempt to resolve the dispute.
Which statements about mediation are correct? Select the two that apply.
A. The AIA B101 requires that mediation be attempted before litigation
B. The mediator is a neutral third-party who acts as a judge and renders a decision
C. The parties must agree to the outcome of the mediation
D. The outcome of mediation is nonbinding
E. Mediation is only for construction phase disputes, not design
F. Mediation is more costly than arbitration
Answer: (Click blurred text to reveal)
The answers are:
A. The AIA B101 requires that mediation be attempted before litigation
D. The outcome of mediation is nonbinding
Choice A is correct based on AIA B101-2017 section 8.2 where it is stated that the owner and architect shall first attempt to resolve disputes and claims by mediation before proceeding to a binding dispute resolution. Choice D is correct, the outcome of mediation is nonbinding. This means the parties must agree to the outcome before it is finalized. If the parties cannot agree, then they proceed to another form of resolution such as arbitration or litigation.
Choice B is incorrect because while the mediator is a neutral third-party, they do not act as a judge and render a decision. The mediator acts as a negotiator or facilitator offering insight and perspective rather than a judgment. Choice C is incorrect, the parties may disagree with the outcome of mediation. Choice E is incorrect, mediation is used for all kinds of disagreements. Choice F is incorrect, arbitration is more costly than mediation.
Ref: Law for Architects; AIA B101-2017
Question 23:
6/22/2020
The overhead costs for an architecture firm are $1,980,000 annually. Their production costs including labor are $1,450,000.
What is the firm’s overhead rate? Round your answer to the nearest hundredth.
__
Answer: (Click blurred text to reveal)
The answer is 1.37.
Overhead rate is calculated by dividing the total overhead by the direct salary expense. $1,980,000/$1,450,000 = 1.365. Round to 1.37. An overhead rate of 1.37 means the company spends $1.37 in overhead for every dollar in production costs. Overhead rate is a useful metric in pricing services and monitoring and improving the overhead rate can improve the company’s bottom line.
Ref: The Architect’s Handbook of Professional Practice
Question 24:
6/29/2020
During the course of a construction project, a significant problem arises and the project owner is threatening legal action against the architect.
What should the architect do?
A. Acknowledge the problem and admit fault after contacting their insurance carrier
B. Attempt to resolve the problem right away to soothe things over
C. Avoid jumping to conclusions until all the facts are discovered
D. Start maintaining records of site visits and construction phase correspondence
Answer: (Click blurred text to reveal)
The answer is:
C. Avoid jumping to conclusions until all the facts are discovered
When confronted with a dispute and possible lawsuit, it is important for an architect to not incriminate themselves, their firm or staff, or their consultants. Frequently there is more to the initial discovery and if the architect admitted fault earlier, it will likely be used against them in the dispute proceedings.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 179
Question 25:
7/6/2020
According to the B101 and U.S. copyright law, the drawings produced by architects belong to the architect. The owner is granted a nonexclusive license to use the drawings for the project.
The architect prepares plans under the B101 for a rooftop deck for an existing restaurant.
Which are a violation of this agreement? Select the three that apply.
A. The architect reuses a portion of the plans for another client’s project
B. The restaurant owner sells a set of the plans to another restaurant owner
C. The owner fires the architect and hires another architect to seal and stamp the plans
D. The restaurant owner reuses the set of plans for another restaurant they own
E. The owner uses photos of the completed project in their marketing material
F. The architect uses photos of the completed project in their marketing material
Answer: (Click blurred text to reveal)
The answer is:
B. The restaurant owner sells a set of the plans to another restaurant owner
C. The owner fires the architect and hires another architect to seal and stamp the plans
D. The restaurant owner reuses the set of plans for another restaurant they own
The design, drawings, models, and even the built structure of an architect is considered intellectual property and is protected by U.S. copyright law. This can often be misunderstood by clients who see the architect’s services as a commodity that they can buy and use and reuse as they please. Reusing plans by a client puts the architect at risk for any problems that develop from the reuse. For the client to own the copyright of a building or set of plans, the architect must give up that right and transfer ownership of the copyright to the client.
Choice B is incorrect because the plans are copyrighted by the architect and are designed for a specific site. Choice C is incorrect because the copyright of the plans stays with the original architect and the owner does not have the right to do with them as they please. Choice D is incorrect because unless agreed to otherwise, the copyright of the plans is with the architect, not the owner, and reuse of the plans is a violation of copyright.
Ref: The Architect’s Handbook of Professional Practice; AIA B101-2017
Question 26:
7/13/2020
The cost-plus project delivery method is selected for a construction project.
The cost-plus structure often requires the architect to perform a higher level of scrutiny during the construction phase towards which of the following?
A. General conditions
B. Submittals
C. Inspections
D. Pay applications
Answer: (Click blurred text to reveal)
The answer is:
D. Pay applications
The cost-plus structure often means the architect will spend more time and effort evaluating the contractor’s expenditures and calculating the contractor’s overhead and profit.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 1050
Question 27:
7/20/2020
The following statements are shown in an architect-consultant agreement.
Which statement should be removed?
A. The Consultant is responsible for means and methods used in performing its services under this agreement.
B. The Architect shall not be responsible for the acts and omissions of the Consultant.
C. Terms in this agreement shall have the same meaning as those in the A201-2017 General Conditions of the Contract for Construction.
D. Either party may terminate this agreement at any time for any reason.
Answer: (Click blurred text to reveal)
The answer is D. Either party may terminate this agreement at any time for any reason.
The standard termination clause in the architect-consultant agreement states that the same terms of termination that are set forth in the owner-architect (the prime agreement) agreement apply. Only the owner may terminate the agreement without cause.
The rest of the answer choices are provisions found in the standard architect-consultant agreement which is the C401.
Ref: C401; The Architect’s Handbook of Professional Practice
Question 28:
7/27/2020
The following documents are used on a construction project.
What shows the documents in order from beginning to end as they would be used for the project?
A. B101, A701, A101, G701
B. B101, A201, A701, G704
C. A201, B101, C401, G701
D. A101, B101, C401, G703
Answer: (Click blurred text to reveal)
The answer is A. B101, A701, A101, G701
The B101 is the owner-architect agreement and thus comes first. The A701 is Instructions to Bidders which is used to solicit competitive bids for a project.The A101 is the owner-contractor agreement that would be entered into when the bid is awarded and the project is ready to start construction. The G701 is the document for change orders and is only used after a contract is in place to change.
Ref: AIA documents
Question 29:
8/3/2020
A firm’s overhead rate is 1.5.
What is the firm’s break-even rate?
____
Answer: (Click blurred text to reveal)
The answer is 2.5
An overhead rate of 1.5 means $1.50 is being spent on overhead for every $1.00 spent on salaries. The break-even rate is the overhead rate plus the unit cost of an hour’s salary which is 1.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 410
Question 30:
8/12/2020
A project is proceeding using a contractor-led design-build method of project delivery.
What is an advantage of this method over traditional design-bid-build?
A. Faster delivery
B. Linear process
C. High quality design
D. More owner control
Answer: (Click blurred text to reveal)
[spoiler]
The answer is A. Faster delivery
Design-build projects are delivered faster than projects delivered under agreements with separate contracts for design and construction.Choice B is incorrect because a linear process describes design-bid-build, not design-build. Design-bid-build is said to be linear because the design phase is complete before construction begins. Choice C is incorrect because with the contractor as the main contract holder, the owner doesn’t have a direct line to the architect and the design-build entity is often more concerned with cost and schedule than design. Choice D is incorrect because in design-build, the architect is a partner with the contractor and thus the owner does not have the architect to represent their interests.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, chapter 9.4
[/spoiler]
Question 31:
8/17/2020
A client is refusing to pay for services rendered, saying they believe the amount on the invoice is too high.
What should the architect do first to remedy the situation?
A. File a lien against the client’s property
B. Review terms of payment in the contract
C. Provide additional supporting evidence for the invoice
D. Have an attorney send a stern letter demanding payment
Answer: (Click blurred text to reveal)
The answer is C. Provide additional supporting evidence for the invoice
Providing supporting information is the easiest and simplest resolution.
Choices A and D are incorrect because the easier remedy (choice C) should be attempted first. Choice B is incorrect because while it is something the architect might do, it does not resolve the problem.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 974
Question 32:
8/24/2020
The Civil Rights Act of 1964 did which of the following?
A. Required government contractors to take affirmative action when hiring
B. Made it illegal for private employers to discriminate against employees on the basis of race and gender
C. Offered minority disadvantaged scholarships to college students on an annual basis
D. Challenged the AIA on issues of diversity and inclusion among its members
Answer: (Click blurred text to reveal)
The answer is B. Made it illegal for private employers to discriminate against employees on the basis of race and gender
The Civil Rights Act of 1964 is a landmark civil rights and labor law in the United States that outlawed discrimination based on race, color, religion, gender, age, disability, or national origin.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 31
Question 33:
8/30/2020
A commissioning consultant will be retained starting in the design phase.
What is a design phase task of the commissioning consultant?
A. Evaluate opportunities for energy savings
B. Review operations and maintenance manuals
C. Review submittals for commissioned systems
D. Coordinate turnover of MEP systems to building owner
Answer: (Click blurred text to reveal)
Answer is A. Evaluate opportunities for energy savings
Typically the commissioning agent is hired by the owner. The commissioning process is made up of four phases of work: design, construction, acceptance, and post-acceptance. During the design phase, the commissioning agent helps the owner identify their specific project requirements, reviews the design in terms of those goals, and discusses and evaluates energy saving opportunities.
Choice B, review operations and maintenance manuals, is an acceptance phase activity. Choice C, review submittals for commissioned systems, is a construction phase activity. Choice D, coordinate turnover of MEP systems to building owner, is a post-acceptance phase activity.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 737
Question 34:
9/07/2020
An architecture firm is working with a new client. The firm has some concerns that the client will try to avoid paying the architect’s fees.
What strategy should the firm follow first?
A. Bill hourly and as often as possible
B. Allow for 10% contingency in the fee
C. Receive a portion of the fee as a retainer
D. Withhold approvals and signatures until paid
Answer: (Click blurred text to reveal)
The answer is C. Receive a portion of the fee as a retainer
A retainer is an advance payment from the client to the firm. The retainer does two things. First, it gives an indication of a client’s willingness and ability to pay for architectural services. Second, the retainer covers the cost of services up until the first invoice. The retainer is then taken out of the last payment when the client is most likely to try to avoid making payments.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 971
Question 35:
9/14/2020
A firm’s professional liability policy has a limit of $1 million / $2.5 million…
How much is available to respond to a single claim?
$_______
Answer: (Click blurred text to reveal)
The answer is $1,000,000
The first number, $1,000,000, is the per claim limit and the second number is the aggregate limit for all claims within the policy time period.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 1015; Law for Architects
Question 36:
9/21/2020
A firm’s professional liability policy has a limit of $1 million / $2.5 million.
How much is available to respond to a single claim?
$_______
Answer: (Click blurred text to reveal)
The answer is $1,000,000
The first number, $1,000,000, is the per claim limit and the second number is the aggregate limit for all claims within the policy time period.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 1015; Law for Architects
Question 37:
9/28/2020
As part of a renovation project, a new rooftop HVAC unit will be added to a building. The mechanical engineer needs to know that the roof structure is adequate to support the new unit. There is no structural consultant already on the job and one will need to be retained.
According to AIA C401 document, what is the communication protocol for requesting the appropriate consultant to perform the analysis?
A.
B.
C.
D.
Answer: (Click blurred text to reveal)
The answer is C.
The proper protocol is that the mechanical engineer should ask the architect to ask the owner to hire a structural engineer.
Ref: AIA C401-2017 sections 2.3 and 5.7
Question 38:
10/5/2020
An owner and an architect enter into an agreement for architectural design services using the B101 document.
Based on the architect’s standard of care, what can the owner expect from the architect?
A. Drawings sufficient for bidding and building the project
B. An innovative, creative, and aesthetically pleasing design
C. A guarantee from the architect that the building will not leak
D. The architect’s and consultants’ drawings will be 100% coordinated
Answer: (Click blurred text to reveal)
The answer is A. Drawings sufficient for bidding and building the project
The standard of care for architects includes producing documents that are sufficient for bidding and building the project.
Choice B is incorrect because providing an innovative, creative, and aesthetically pleasing building is subjective and therefore not applicable to the architect’s standard of care which is to provide skill and care when providing services. Choice C is incorrect because the architect is not required to promise a leak-proof building, only that the services provided by the architect are reasonable and prudent. By making that promise, the architect would be raising the standard of care which is not recommended and might not be insurable. Choice D is incorrect because minor errors or inconsistencies are normal in any drawing set and architects are not held to a standard of perfection.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, section 5.1f
Question 39:
10/13/2020
An architecture firm is designing an 18,000 square foot photography studio. The architect’s design fees are $56,000 and the consultant fees are $37,000.
The project fee is structured with the following breakdown:
Schematic design: 20%
Design development: 20%
Construction documents: 40%
Bidding and negotiation: 5%
Contract administration: 15%
Three architects within the firm are assigned to the project. The billing rates for each are as follows:
Principal Architect: $175/hour
Project Architect: $130/hour
Intern Architect: $90/hour
For the construction documents phase only, the intern spent 160 hours and the project architect spent 40 hours on the project. The principal architect needs to review the drawings and wants to know how much time is left in the design budget for the review.
How many hours does the principal architect have to review the documents before going out to bid?
___ hours
Answer: (Click blurred text to reveal)
The answer is 16 Hours
First find the amount of the fee allocated to the construction documents phase.
$56,000 x 0.4 = $22,400
Next find the amount already spent by the intern architect and project architect.
Intern Architect: 160 hours x $90/hr = $14,400
Project Architect: 40 hours x $130/hr = $5,200
Total: $14,400 + $5,200 = $19,600
Then subtract the amount spent from the amount budgeted.
$22,400 - $19,600 = $2,800
Finally, divide the remaining fee by the principal architect’s hourly billing rate.
$2,800 / $175 = 16 hours
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 623-624
Question 40:
10/20/2020
A sole proprietor architect decides to retire but wants continued protection for risks associated with work previously completed.
What kind of insurance coverage provides this kind of protection?
A. Tail
B. Nose
C. Casualty
D. Project-based
Answer: (Click blurred text to reveal)
The answer is A. Tail
Tail insurance offers continued coverage to retired architects with claims-based professional liability policies.
Ref: The Architect’s Handbook of Professional Practice; Professional Practice: A Guide to Turning Designs into Buildings, page 112
Question 41:
10/27/2020
A firm’s professional liability policy has a limit of $1 million per claim and $2 million aggregate. The deductible is $10,000.
A design error brings a claim of $1,500,000 in damages and legal fees.
How much does the firm pay?
$_______
Answer: (Click blurred text to reveal)
The answer is $510,000
The firm pays the deductible and the amount over the per claim policy limit. Since the per claim limit is $1,000,000, the firm pays the first $10,000 and the remaining $500,000.
Ref: The Architect’s Handbook of Professional Practice; Law for Architects
Question 42:
11/3/2020
A new project manager is tasked with determining a fee for architectural services. The project manager is asked to consider both top-down and bottom-up approaches to arrive at a fee amount.
What is an activity associated with a top-down approach to determining design fees?
A. Review the fees charged for past jobs with a similar scope of services
B. Plan staffing hours and build a fee based on the firm’s hourly billing rates
C. Prepare a feasible project plan based on scope, schedule, tasks and resources
D. Create a list of project deliverables and mock-up a cartoon set in order to create a realistic project plan
Answer: (Click blurred text to reveal)
The answer is A. Review the fees charged for past jobs with a similar scope of services
Project budgets are approached from the top down, bottom up, or likely a combination of both. A top-down approach starts with an idea for a total fee amount (the top) whereas a bottom-up approach is built from examining the tasks and efforts anticipated (the bottom) to complete the project. A top-down approach often starts with historical data from projects of similar scope and complexity or by taking a percentage of the construction cost. Bottom-up approaches often start with developing a project plan.
According to The Architect’s Handbook of Professional Practice, best practices for determining design fees are to use a combination of both top-down and bottom-up approaches.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 623
Question 43:
11/10/2020
An architect is negotiating an indemnity clause in an owner-generated contract.
What term or phrase is synonymous with indemnify?
A. Collusion
B. Subrogation
C. Hold harmless
D. Liquidated damages
Answer: (Click blurred text to reveal)
The answer is C. Hold harmless
Indemnification is synonymous with “hold harmless” and is a contract provision whereby one party assumes another’s legal liability.
Choice A, collusion, is cooperation or coordination in order to mislead or cheat others. Collusion is often illegal. Choice B, subrogation, is the substitution of one person for another with respect to legal rights such as the right of recovering damages. Choice D, liquidated damages is a contract provision whereby a contractor will be obligated to pay the project owner an agreed upon amount for delays in the project schedule.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 1009
Question 44:
11/17/2020
Refer to the architect’s fee schedule for a design project with several consultants.
What is the architect’s net fee for the month of March?
$______
Answer: (Click blurred text to reveal)
The answer is $27,770.00
To get the architect’s net fee, find the total amount of the fee paid to consultants in March and subtract this amount from the gross fee for March.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 973
Question 45:
11/17/2020
A client needs the construction cost information to be known before the project is designed.
What contract type should be selected?
A. Cost plus
B. Design-build
C. Design-bid-build
D. Construction manager
Answer: (Click blurred text to reveal)
The answer is B. Design-build
In design-build, the cost is usually a fixed fee for both design and construction and is established up front before any design is begun.
Choice A is incorrect because in cost-plus contracts, the cost is only known upon completion. Choice C is incorrect because cost information in a design-bid-build project is only known after bidding. Choice D is incorrect because the costs are established after design.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, pages 512 and 516
Question 46
11/23/2020
A project owner uses the A101/A201 contract for construction.
What is known about this project? Select all that apply.
A. The project will be fast-tracked
B. The project is small, perhaps only interiors
C. The contract is structured as design-build
D. The project will proceed with phased construction
E. Construction is to be done for a fixed, agreed-upon amount
F. The project will be performed by a single prime general contractor
Answer: (Click blurred text to reveal)
The answers are:
E. Construction is to be done for a fixed, agreed-upon amount
F. The project will be performed by a single prime general contractor
The A101/A201 agreement is used for stipulated sum (fixed fee) sole prime contracts.
Ref: Professional Practice: A Guide to Turning Designs into Buildings, chapter 8
Question 47
12/1/20
An architect is reviewing various insurance policies and must determine which best suits their firm.
In insurance, what does the amount of the deductible affect?
A. Liability
B. Discount
C. Premium
D. Coverage
Answer: (Click blurred text to reveal)
The answer is C. Premium
The deductible is the portion of a claim you pay out of pocket. A higher deductible lowers the premiums.
Ref: Law for Architects
Question 48
12/7/20
A client brings a lawsuit against an architecture firm for professional negligence. To be successful in the lawsuit, the plaintiff (the client) must prove that the defendant (the architect) violated a ____ that was the cause of ____.
What words correctly complete the sentence? Select the two that apply.
A. Law
B. Duty
C. Rule
D. Suffering
E. Damages
F. Negligence
Answer: (Click blurred text to reveal)
The answers are
B. Duty
E. Damages
The plaintiff (the client) must prove that the defendant (the architect) violated a duty that was the cause of damages.
To be successful in the lawsuit, the plaintiff will have to prove four things: duty, breach, cause, and damages. Duty is something the defendant legally or contractually owed to the plaintiff. Breach of duty can either be an action or a failure to act. Cause means it was the action or inaction that caused the plaintiff injury or harm. Damages are the harm or injury that the plaintiff suffers because of the defendant.
Ref: Professional Practice: A Guide to Turning Designs into Buildings, chapter 8; The Architect’s Handbook of Professional Practice
Question 49
12/14/20
An architect licensure candidate lives in a state where a license can be obtained without an accredited degree.
Generally speaking, what does the candiate need more of in order to obtain licensure?
A. Testing
B. Experience
C. References
D. Credentials
Answer: (Click blurred text to reveal)
The answer is B. Experience
Generally speaking, when a state allows a lower education threshold, they usually require a longer internship period.
Ref: The Architect’s Handbook of Professional Practice
Question 50
12/21/20
An employee is laid off from an architecture firm due to lack of work. The employee can stay on the employer’s health plan but must pay their own premiums.
What regulation provides the former employee with access to the continued coverage?
A. ACA (Affordable Care Act)
B. FLSA (Fair Labor Standards Act)
C. OSHA (Occupational Safety and Health Administration)
D. COBRA (Consolidated Omnibus Budget Reconciliation Act)
Answer: (Click blurred text to reveal)
The answer is D. COBRA (Consolidated Omnibus Budget Reconciliation Act)
COBRA requires employers of a certain size to allow employees and their dependents continued coverage under the employer’s medical plan when the employee loses their job or experiences a reduction in hours.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 451
Question 51
12/28/20
A construction project is federally funded and is subject to the Davis Bacon Act.
What aspect of workers’ employment does this act concern?
A. Hours
B. Rights
C. Safety
D. Wages
Answer: (Click blurred text to reveal)
The answer is D. Wages
The Davis Bacon Act is a federal law that establishes the requirement for paying construction laborers the local prevailing wage on public projects.
Ref: The Architect’s Handbook of Professional Practice
Question 52
1/4/21
An architect is reviewing various insurance policies and must determine which best suits their firm. Some of the policies offer first dollar coverage.
What describes first dollar coverage?
A. In the event of a claim, the insurance carrier pays legal fees after the deductible is met
B. Legal fees for defending against claims are paid by the insurance carrier from the start of a claim
C. The insurance carrier provides pre claim services to address potential claims before they are brought
D. The policy in effect at the time of the claim covers the claim no matter when the event that gave rise to the policy occurred
Answer: (Click blurred text to reveal)
The answer is B. Legal fees for defending against claims are paid by the insurance carrier from the start of a claim
First dollar defense means the total defense costs associated with claims are paid from the beginning by the insurance carrier.
Ref: Law for Architects; The Architect’s Handbook of Professional Practice, 15th edition, page 1011
Question 53
1/10/21
An employee at an architecture firm is paid $40 an hour plus full benefits. The employee’s utilization rate is 95% and the firm’s net multiplier is 3.2.
What is the hourly billable rate for this employee?
$___
Answer: (Click blurred text to reveal)
The answer is $128
Multiply the employee’s hourly rate times the multiplier.
$40 x 3.2 = $128
The multiplier is an amount over and above the cost of the employee’s pay including benefits, overhead, and profit. The employee’s utilization rate is given in the scenario but is not needed to answer the question.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 443
Question 54
1/18/21
An engineering consultant is hired and AIA C401 is used as the agreement.
Based on C401, how does the consultant get paid?
A. Monthly, by the architect
B. Monthly, by the owner directly
C. Upon completion of services, by the architect
D. Upon completion of services, by the owner directly
Answer: (Click blurred text to reveal)
The answer is A. Monthly, by the architect
Based on AIA C401-2017, consultants are paid by the architect promptly after the architect is paid by the owner which is monthly based on B101.
Ref: AIA C401-2017 section 11.6.2
Question 55
1/25/21
A newly licensed architect is reviewing NCARB’s Model Rules of Conduct.
Based on the model rules, what is the primary duty of the architect in practicing architecture?
A. To protect the health, safety, and welfare of the public
B. To ensure the client’s budget and program are followed
C. To address cultural and societal values into the design of buildings
D. To prepare plans and specifications that conform to applicable codes
Answer: (Click blurred text to reveal)
The answer is. A. To protect the health, safety, and welfare of the public
The Model Rules of Conduct are published as a recommended set of rules for jurisdictional licensing boards (states and territories). The objective of these Model Rules of Conduct is the protection of the public health, safety, and welfare.
Ref: NCARB Model Rules of Conduct; The Architect’s Handbook of Professional Practice
Question 56
2/1/21
An architecture firm changes their business structure to a C-corporation.
What is an advantage of a C-corporation?
A. Costs little to form
B. Ease of transferring ownership
C. Easy to file incorporation paperwork
D. Directors and officers are not personally liable for professional negligence
Answer: (Click blurred text to reveal)
The answer is B. Ease of transferring ownership
Ownership in C-corporations have no limit to the number of shareholders can be done by buying and selling stock.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 200; Professional Practice, A Guide to Turning Designs into Buildings, page 105
Question 57
2/8/21
A new firm is structuring their fees with the intent to build in a reasonable amount for profit based on industry standards.
What profit goal should they choose?
A. 5%
B. 20%
C. 50%
Answer: (Click blurred text to reveal)
The answer is B. 20%
20% is a common profit goal for architecture firms.
Ref: The Architect’s Handbook of Professional Practice, 15th edition
Question 58
2/15/21
An employee of an architecture firm breaks a window while measuring a building.
What type of insurance carried by the firm covers the incident?
A. Property
B. General liability
C. Professional liability
D. Errors and omissions
Answer: (Click blurred text to reveal)
The answer is B. General liability
Property damage caused by an employee’s nonprofessional negligence is covered by general liability insurance.
Ref: Law for Architects; The Architect’s Handbook of Professional Practice, 15th edition, page 1071
Question 59
2/23/21
An architecture firm is dedicated to providing evidence-based design methodologies to better inform their retail and health care designs.
Evidence-based design (EBD) is closely associated with what?
A. Scientific research
B. Client expectations
C. Technical knowledge
D. Designer credentials
Answer: (Click blurred text to reveal)
The answer is A. Scientific research
Evidence-based design (EBD) is associated with application of knowledge gained through scientific research. An example of EBD is providing large windows in educational settings where it is shown that daylighting helps students perform better on tests. Another example is giving hospital patients personalized lighting, temperature, and music controls to create a healing environment which leads to shorter stays and less medications.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 903-904
Question 60
3/1/21
An architecture firm contracts with a freelance architect as an independent contractor for producing working drawings on a renovation project. The freelancer later claims they should have been classified as an employee instead of a contractor.
What entity determines if the contractor is in fact an employee of the firm?
A. Secretary of State
B. State Licensing Board
C. Internal Revenue Service
D. Social Security Administration
Answer: (Click blurred text to reveal)
The answer is C. Internal Revenue Service
A business must determine whether workers are employees or contractors based on federal employment tax purposes. Worker classification is important because it determines if an employer must withhold income taxes and pay Social Security, Medicare taxes, and unemployment tax on wages paid to an employee. The IRS can help small businesses and independent contractors correctly classify workers.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 254
Question 61
3/9/21
During construction, a dispute between the owner and the contractor arises.
According to AIA A101, in what order should dispute resolutions be taken?
A. Mediation, litigation, arbitration
B. Mediation, arbitration, litigation
C. Initial decision maker, mediation, litigation
D. Initial decision maker, arbitration, mediation
Answer: (Click blurred text to reveal)
The answer is C. Initial decision maker, mediation, litigation
The initial decision maker must first try to resolve the dispute. If the IDM is unsuccessful, the parties go to mediation. If the dispute is not resolved by mediation, the parties will go to either arbitration or litigation, depending on what was selected in the contract when it was agreed to. If neither arbitration or litigation was selected, the parties will go to litigation.
Ref: AIA A101-2017 Article 6
Question 62
3/15/21
A client and an architect enter into a contract for design services. The owner-architect agreement prohibits joinder.
What does this mean?
A. Once a ruling in a dispute has been rendered, neither party may appeal the decision
B. Disallows the client from bringing legal action against both the architect and the contractor at the same time
C. Allows the client to bring legal action against both the architect and the contractor under the same single action
D. In the event of a dispute between the architect and client, the parties must first try to resolve the dispute by non-binding mediation
Answer: (Click blurred text to reveal)
The answer is B. Disallows the client from bringing legal action against both the architect and the contractor at the same time
Joinder is the joining of two or more legal issues together. Joinder is prohibited by AIA contracts. An example of joinder is a roof leaks and it is unclear whether the leak is due to a design error or construction error. Joinder prohibits the building owner from suing both the architect and contractor together in a single action. Prohibiting joinder is important because it forces the client to figure out the cause of the problem rather than throwing everyone together in a suit and in essence saying, “I have a problem and I don’t care who caused it, but you both need to pay for it.”
Ref: Professional Practice, A Guide to Turning Designs into Buildings, pages 88 and 114-115
Question 63
3/22/21
A construction contract contains a ‘force majeure’ clause.
What qualifies as a force majeure?
A. War
B. Tornado
C. Epidemic
D. Labor strike
E. Supplier delay
F. Employee negligence
Answer: (Click blurred text to reveal)
The answer is
A. War
B. Tornado
C. Epidemic
D. Labor strike
A force majeure clause suspends a party’s obligation to perform under an agreement during an uncontrollable time-impacting event. In these cases, a contractor may be entitled to an increase in the contract time and possibly an increase in the contract sum.
Choices E and F are not unpredictable events and are therefore not covered by the contract’s force majeure clause.
Ref: Professional Practice, A Guide to Turning Designs into Buildings, page 97; The Architect’s Handbook of Professional Practice
Question 64
3/29/21
An architecture firm is reviewing their policies and procedures with their legal counsel.
The firm’s chosen method of dispute resolution is best determined alongside what other activity?
A. Assertion of a claim by either party
B. Establishment of the firm’s business plan
C. Signing of the owner-architect agreement
D. Preparing the general conditions of the contract
Answer: (Click blurred text to reveal)
The answer is C. Signing of the owner-architect agreement
When a dispute arises, everybody should know in advance what method of dispute resolution will be used. Based on AIA B101-2017 article 8, any claim or dispute shall first be subject to non-binding mediation. B101 then has a section after that where the parties select a method of binding resolution which is either arbitration, litigation, or another form of resolution that can be written into the agreement.
Ref: AIA B101-2017, The Architect’s Handbook of Professional Practice
Question 65
4/5/21
An employee at an architecture firm turns in the following timesheet:
Juniper Tree High School, construction documents: 16 hours
Masonville Park Shelter, schematic design: 3 hours
Hattery Building, code review: 2 hours
Shooter’s Bar and Grill, contract administration: 4 hours
The Nook (bookstore), measure existing: 2.5 hours
All-staff meeting: 1 hour
Tour and lunch at the brick factory: 2.5 hours
Seven Gables Restaurant, print and collate drawings: 2 hours
Coconut Grove Hotel, specifications: 6 hours
Office general, miscellaneous: 1 hour
What is the utilization rate of the employee? Round your answer to the nearest percent.
___%
Answer: (Click blurred text to reveal)
The answer is 79%
Utilization rate is direct labor expressed as a percentage of total labor. To find the answer, add up the total hours (40 hours) and billable hours (31.5 hours). Then find the ratio by dividing the billable hours by the total number of hours.
31.5 / 40 = 0.78575
Multiply by 100 to get a percentage and round up to 79%.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 410 and 417
Question 66
4/12/21
A senior architect’s pay is $50.00 an hour. The firm’s net multiplier is 2.8.
What is the hourly billing rate for the architect? Provide your answer rounded to the nearest whole number.
$___
Answer: (Click blurred text to reveal)
The answer is *$140
To find the employee’s hourly billing rate, multiply the hourly salary times the net multiplier.
$55 x 2.8 = $140
Ref: The Architect’s Handbook of Professional Practice, 15th edition, chapter 10.3
Question 67
4/19/21
An architecture firm was recently awarded a project for a small restaurant. The architect’s fee is fixed at $6,000. The project is expected to take 60 hours to complete.
If the firm’s net multiplier is 3.2, what is the maximum hourly rate of the employee that should complete the project? Provide your answer to the nearest whole number.
$____
Answer: (Click blurred text to reveal)
The answer is $31
First find the target billing rate.
$6,000 / 60 hours = $100
Then divide the hours by the net multiplier.
$100 / 3.2 = $31.25. Round to $31.
Ref: The Architect’s Handbook of Professional Practice, 15th edition
Question 68
4/26/21
A newly licensed architect wishes to start their solo firm with an annual salary of $80,000 and take 4 weeks of paid time off a year.
Their annual anticipated expenses are as follows:
Insurances including E&O, general, and health: $16,000
Office expenses including rent, software, and communications: $8,200
Miscellaneous expenses including continuing education and legal and business consulting: $1,400
The architect expects to be able to bill 20 hours a week and spend the other 20 hours a week on non billable time such as marketing and accounting.
What should the architect’s hourly billable rate be?
$___
Answer: (Click blurred text to reveal)
The answer is $110
Total the expenses including salary.
$16,000 + $8,200 +$1,400 + $80,000 = $105,600
Find the total number of billable hours in a year.
52 weeks - 4 weeks vacation = 48 weeks
40 hours a week / 2 = 20 billable hours a week
48 weeks x 20 hours = 960 hours
$105,600 / 960 billable hours = $110
Ref: The Architect’s Handbook of Professional Practice, 15th edition, chapter 7.4
Question 69
5/3/21
An architecture firm has a break even rate of 2.5. The firm wishes to plan for a 20% profit goal for the coming year.
What should the firm’s net multiplier be?____
Answer: (Click blurred text to reveal)
The answer is 3.125
Break even rate is the multiplier that will allow the firm to just break even. In other words, their revenue will pay salaries and overhead but not make any profit.
First find the complement of the profit goal.
100 - 0.20 - 0.80
Then find the targeted net multiplier by dividing the break-even rate by the complement of the profit goal.
2.5 / 0.80 = 3.125
3.125 is the multiplier that the firm should use to achieve a 20% profit.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, pages 441-442
Question 70
5/10/21
An architecture firm’s total direct labor expense is $420,000 and the firm has an overhead rate of 1.5.
What is the amount of the firm’s overhead? $_____
Answer: (Click blurred text to reveal)
The answer is $630,000
Overhead is found by multiplying the firm’s overhead rate times their direct labor expense.
$420,000 x 1.5 = $630,000
The Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 410
Question 71
5/17/21
A firm made $150,000 in net revenue last year, had $100,000 salary expenses and $30,000 in other overhead expenses.
What is the firm’s profitability rate? ___%
Answer: (Click blurred text to reveal)
The answer is 13%
The firm’s profitability rate is found by dividing the net profit by the net revenue. Net profit is found by subtracting the overhead and salary expenses from the net revenue.
First find net profit.
$150,000 - $100,000 - $30,000 = $20,000 net profit
Then find the profitability rate and express as a percentage.
$20,000 / $150,000 (100) = 13%
The Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 418
Question 72
5/24/21
An architecture firm is performing an evaluation of the utilization rates of their employees and has gathered the following data:
Employee A
- Hours worked per year: 1,920
- Billing rate: $150/hr
- Annual realizable revenue: $158,400
Employee B
- Hours worked per year: 2,000
- Billing rate: $125/hr
- Annual realizable revenue: $187,500
Employee C
- Hours worked per year: 2,040
- Billing rate: $125/hr
- Annual realizable revenue: $229,500
Employee D
- Hours worked per year: 2,040
- Billing rate: $95/hr
- Annual realizable revenue: $77,520
What employee has the best utilization rate?
A. Employee A
B. Employee B
C. Employee C
D. Employee D
Answer: (Click blurred text to reveal)
The answer is C. Employee C
Find each employee’s utilization rate.
Employee A
1,920 hours x $150/hr = $288,000
$158,400 / $288,000 = 0.55 or 55%
Employee B
2,000 hours x $125/hr = $250,000
$187,500 / $250,000 = 0.75 or 75%
Employee C
2,040 hours x $125/hr = $255,000
$229,500 / $255,000 = 0.9 or 90%
Employee D
2,040 hours x $95/hr = $193,800
$77,520 / $193,800 = 0.4 or 40%
Employee C at 90% utilization is the highest.
The Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 410
Question 73
5/31/21
A small architecture firm would like to achieve a profit of 10%. Their current break-even rate is 2.7.
What should the firm’s net multiplier be?____
Answer: (Click blurred text to reveal)
The answer is 3
The firm would need to achieve a net multiplier of 3 in order to earn a 10% profit.
2.7 / 0.90 = 3
Ref: The Architect’s Handbook of Professional Practice, 15th edition, chapter 7.2
Question 74
6/7/21
A firm has $1,000,000 in net revenue and $400,000 in direct labor costs. The firm’s break-even multiplier is 3.0.
What is known about this firm’s financial well-being?
A. They are losing money
B. They are just breaking even
C. They are making a small profit
Answer: (Click blurred text to reveal)
The answer is A. They are losing money
The firm’s break-even number is the break-even multiplier multiplied by the direct labor costs.
$400,000 x 3 = $1,200,000.
This means the firm needs to bring in $1,200,000 in net revenue just to break even. They are bringing in $1,000,000 which leaves them $200,000 short.
Ref: The Architect’s Handbook of Professional Practice
Question 75
6/14/21
An architecture firm’s financial data shows the following information for the year 2020:
Income: $3,000,000
Expenses: $1,600,000
Assets: $6,200,000
Liabilities: $1,800,000
What is the return on equity expressed as a percentage? Round your answer to the nearest whole number.___%
Answer: (Click blurred text to reveal)
The answer 32%
Return on equity is calculated by dividing the net revenue by the equity.
First find the net revenue by subtracting the expenses from the income.
$3,000,000 - $1,600,000 = $1,400,000 net revenue
Then find the amount of equity by subtracting the liabilitie from the assets.
$6,200,000 - $1,800,000 = $4,400,000
Finally, find the return on equity by dividing the net revenue by the equity amount.
1,400,000 / 4,400,000 = 0.318
To express the answer as a percentage, multiply by 100.
0.318 x 100 = 31.8%. Round to 32%.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 418
Question 76
6/21/21
An architecture firm has 4 branch offices in different cities. Some financial information about the offices is listed below.
Charlotte, North Carolina
- Revenue: $6,500,000
- Overhead expenses: $1,300,000
- Salary expenses: $4,300,000
Indianapolis, Indiana
- Revenue: $1,500,000
- Overhead expenses: $650,000
- Salary expenses: $450,000
San Diego, California
- Revenue: $12,000,000
- Overhead expenses: $2,800,000
- Salary expenses: $6,600,000
Baltimore, Maryland
- Revenue: $8,500,000
- Overhead expenses: $3,000,000
- Salary expenses: $2,300,000
What branch office has the best return on overhead (ROO)?
A. Baltimore, Maryland
B. Indianapolis, Indiana
C. San Diego, California
D. Charlotte, North Carolina
Answer: (Click blurred text to reveal)
The answer is A. Baltimore, Maryland
First you must find the profit for each branch office. Profit is the amount left over after expenses such as overhead and salaries are paid and is found by subtracting the expenses from the revenue.
Step 1: Calculate the total overhead for each office by adding the salary expense to the overhead expenses.
Charlotte, North Carolina: $1,300,000 + $4,300,000 = $5,600,000
Indianapolis, Indiana: $650,000 + $450,000 = $1,100,000
San Diego, California: $2,800,000 + $6,600,000 = $9,000,000
Baltimore, Maryland: $3,000,000 + $2,300,000 = $5,300,000
Step 2: Find the profit for each office by subtracting the total expenses from the revenue.
Charlotte, North Carolina: $6,500,000 - $5,600,000 = $900,000
Indianapolis, Indiana: $1,500,000 - $1,100,000 = $400,000
San Diego, California: $12,000,000 - $9,000,000 = $3,000,000
Baltimore, Maryland: $8,500,000 - $5,300,000 = $3,200,000
Step 3: Calculate the return on overhead (ROO) by dividing the profits of each office by the total overhead expenses for the same office.
Charlotte, North Carolina: $900,000 / $5,600,000 = 0.16 or 16%
Indianapolis, Indiana: $400,000 / $1,100,000 = .36 or 36%
San Diego, California: $3,000,000 / $9,000,000 = 0.33 or 33%
Baltimore, Maryland: $3,200,000 / $5,300,000 = .60 or 60%
The best return on overhead is the highest percentage which is Baltimore at 60%.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, pages 285-286
Question 77
7/1/21
An architecture firm’s financial data shows the following information for the year 2017:
Income: $4,000,000
Expenses: $3,300,000
Assets: $8,000,000
Liabilities: $2,600,000
What is the firm’s debt to equity ratio expressed as a percentage? Round your answer to the nearest whole number.
__%
Answer: (Click blurred text to reveal)
The answer is 48%
Debt-to-equity is found by dividing the firm’s liabilities by its equity.
First, find the firm’s equity by subtracting liabilities from assets.
$8,000,000 - $2,600,000 = $5,400,000
Then find the ratio by dividing liabilities by equity.
$2,600,000 / $5,400,000 = 0.481
Multiply by 100 to express the answer as a percentage.
0.481 x 100 = 48.1. Round to 48%.
The debt-to-equity ratio is also called leverage. Leverage tells you the amount of debt a company has relative to the value of its assets and measures the ability of a firm to manage debt effectively. Based on the Architect’s Handbook of Professional Practice, the maximum target percentage for the debt-to-equity ratio is 35%.
The Architect’s Handbook of Professional Practice, 15th edition, page 418
Question 78
7/26/21
An architecture firm markets themselves as executing projects with integrity.
What can be inferred about this firm and its owners?
A. Keep their promises
B. Are disciplined and thoughtful
C. Have highly specialized knowledge
D. Contribute regularly to the community
Answer: (Click blurred text to reveal)
The answer is A. Keep their promises
To have integrity means to say what you mean and mean what you say. In other words, it means you keep your promises.
The Architect’s Handbook of Professional Practice, 15th edition, page 197
Question 79
8/03/21
A firm has an annual goal of generating $650,000 in net operating revenue. At the end of March, the firm has a revenue of $165,000 and a backlog of $55,000. The firm owner feels confident that at least 90% of the backlog will be realized.
Based on this information, how much more revenue does the firm need to secure before the end of the year in order to meet their revenue goal?
$___
Answer: (Click blurred text to reveal)
The answer is $435,500.
First, find the amount that needs to be earned after the end of March by subtracting the annual goal from the amount already earned.
$650,000 - $165,000 = $485,000
Then find the amount that the backlog is expected to bring in.
$55,000 x .090 = $49,500
Finally, subtract the backlog amount from the required revenue for the remainder of the year.
$485,000 - $49,500 = $435,500
The Architect’s Handbook of Professional Practice, 15th edition, page 438
Question 80
8/10/21
An architect has an annual salary of $85,000. The firm’s overhead rate is 1.5.
What is the hourly break-even billing rate for the architect?
$___
Answer: (Click blurred text to reveal)
The answer is $102
The break-even rate is the overhead rate plus 1.
1.5 + 1 = 2.5
The hourly rate of an employee salary of $85,000 can be found by dividing by the number of working hours in a year which is 2,080.
$85,000 / 2,080 = $40. 87
Multiply the hourly rate by the break-even rate to find the hourly break-even rate.
40.87 x 2.5 = 102.18. Round to $102.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 415
Question 81
8/18/21
An architecture firm of 8 has several projects to work on and is considering adding staff member. The new staff member will be an entry level hire, will receive training, and will be mostly tasked with preparing technical documents.
Adding the new person to the firm will most likely lead to what result?
A. Lower overhead rate
B. Lower profitability rate
C. Lower firm utilization rate
Answer: (Click blurred text to reveal)
The answer is A. Lower overhead rate
A lower overhead rate is most likely because the big overhead items like office space and support staff will be spread out over another person.
Choice B is incorrect because the profitability rate is net income divided by net revenue. For example, an intern with an 80% utilization rate working 2000 hours a year who bills at $70 an hour and is paid $20 an hour will bring the firm $140,000 in revenue and cost only the salary, benefits, and costs for the interns workstation. Even factoring in costs for training, the profitability rate for the firm is likely to increase, not decrease. Choice C is incorrect because an entry level employee producing technical documents has a high utilization rate, often 90% or higher.
Ref: The Architect’s Handbook of Professional Practice
Question 82
8/24/21
The common law standard of care defines what is expected of an architect in determining whether or not an action is considered negligence.
What type of skill and care is required of a practicing architect by the standard of care?
A. Perfect
B. Ordinary
C. Responsible
Answer: (Click blurred text to reveal)
The answer is B. Ordinary
The standard of care is the basis against which architects are measured to determine if they were acting negligently or not. This means architects are held to a standard that their services be rendered with the same degree of skill and care of other practitioners. The key to the concept of the standard is that it is ordinary.
Ref: AIA B101-2017 section 2.2; The Architect’s Handbook of Professional Practice, 15th edition, page 992
Question 83
9/13/21
Four years after the construction of a new mixed-use building, a leak in the roof is discovered. The owner brings a claim against the architect.
In order to defend against the claim, what type of record offers the most benefit to the architect?
A. Written documentation taken throughout the project’s duration
B. Written or spoken reports by an expert who performed an investigation
C. Spoken testimonies from key project participants provided at the time of the claim
D. Written documentation of all design changes initiated by a party other than the architect
Answer: (Click blurred text to reveal)
The answer is A. Written documentation taken throughout the project’s duration
Not only is contemporaneous documentation of the project beneficial for the daily activities of the project, it is invaluable in the event claims arise. This is because claims, if they arise, are often brought several years after the event that gave rise to the claim has occurred. These written records are critical when resolving disputes later.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 178-179; Law for Architects, chapter 7
Question 84
10/11/21
An architecture firm has a business structure that protects the personal assets of the owners. The firm is taxed on the firm’s earnings and the owners are taxed again on their wages.
What business structure is described?
A. Partnership
B. Corporation
C. Sole Proprietorship
D. Limited Liability Company (LLC)
Answer: (Click blurred text to reveal)
The answer is B. Corporation
The earnings of a corporation are taxed at the corporate level and the remaining profits are then taxed a second time on individual income tax returns.
The Architect’s Handbook of Professional Practice
Question 85
11/8/21
An employee of an architecture firm is injured while on a jobsite.
What type of insurance policy protects the firm from costs associated with the injury?
A. General Liability
B. Professional Liability
C. Errors and Omissions
D. Workers’ Compensation
Answer: (Click blurred text to reveal)
The answer is D. Workers’ Compensation
Workers hurt on the job are covered by workers’ compensation policies.
Professional Practice, A Guide to Turning Designs into Buildings, pages 99-100; The Architect’s Handbook of Professional Practice
Question 86
12/13/21
The end of the year is approaching and employee reviews are being scheduled at an architecture firm. The employer will be appraising each employee’s performance.
What should be a component of the employer’s appraisal evaluation?
A. Employee evaluates their own performance
B. Firm’s compensation philosophy and strategy
C. Comparisons of the employee to their peers
D. Evaluation of the employee’s personality traits
Answer: (Click blurred text to reveal)
The answer is A. Employee evaluates their own performance
Having the employee evaluate their own performance makes the review a two-way process rather than a top-down, one-way conversation where the employer judges the employee and the employee may become defensive.
The Architect’s Handbook of Professional Practice
Question 87
1/18/22
Refer to the timeline of a construction project.
What contract structure is represented?
A. Cost plus fixed
B. Design-build bridging
C. Construction manager as adviser
D. Construction manager guaranteed maximum price
Answer: (Click blurred text to reveal)
The answer is D. Construction manager guaranteed maximum price
The project timeline shows a construction manager guaranteed maximum price that is also fast-tracked.
Ref: The Architect’s Handbook of Professional Practice, 15th edition, page 516
