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ARE 5.0 - Practice Management Exam
2025 | Questions & Answers (Graded A+)
statute of limitations - ANSWER -allowable time frame in which to bring legal action begins only when the injury or defect is discovered agent - ANSWER -an individual who is authorized to act on one's behalf (principle) principle - ANSWER -one who has an agent acting on their behalf agency - ANSWER -when an agent (ID) acts on behalf of a principal (owner) in dealing with a third party (contractor) owner-architect relationship - ANSWER -limited agency relationship represents the owner's interests called upon to render unbiased judgement in disputes between owner and contractor (cannot be held liable for stance taken in this situation) architect-employee relationship - ANSWER -architect is responsible for the actions of their employees architect-consultant relationship - ANSWER -consultants may sometimes act as agents of the architect architect not free from liability of actions by consultants architects not usually responsible if consultants were hired directly by the owner unless negotiated into the owner-architect agreement vicarious liability - ANSWER -legal responsibility placed on one person for the acts of another architect not free from liability of actions by consultants antitrust laws basic principles - ANSWER -1. cannot fix or maintain price
- cannot boycott a client
- cannot allocate business or customers antitrust laws commonly reviewed activities - ANSWER -1. fees
- competitive bidding
- design competitions
- information surveys
sole proprietorship - ANSWER -a business owned and managed by a single individual all personal assets at risk does not file separate tax return simplest form of practice partnerships - ANSWER -businesses with two or more owners personal assets at risk based on capital contributions not filed separately amongst partners formal written agreement needed to specify duties, roles and individual responsibilities corporations - ANSWER -legal entity separate from it's members often more stable The most complex, requires extensive paperwork, board of directors, shareholder meetings, etc. filed as a legal entity separate from members ethical standards - ANSWER -rules or standards for moral behavior a set of values held by a unique and finite group of individuals canon 1: general obligations - ANSWER -architect should maintain and advance knowledge. respect the profession and it's accomplishments canon 2: obligations to the public - ANSWER -architect must obey the law and promote and serve the public interest canon 3: obligations to the client - ANSWER -architects should serve their clients competently and professionally exercise unpredjudiced and unbiased judgement in professional services canon 4: obligations to the profession - ANSWER -architects should uphold the dignity and integrity of the profession canon 5: obligations to colleagues - ANSWER -architects should respect the rights and acknowledge the professional aspirations and contributions of colleagues
third party actions - ANSWER -architect can be held liable for negligent acts, errors, or omissions to third parties with whom the architect has no contractual relationship statute of repose - ANSWER -a statute of limitations with an absolute time frame in which legal action can be brought against the architect teaming agreement - ANSWER -developed in JOINT VENTURES to define roles , responsibilities, and contractual obligations canon 6: obligations to the environment - ANSWER -architects should be environmentally responsible promote sustainable design advocate for sustainable practices in building design, site design and in their practice procedures AIA code of ethics - ANSWER -provides a minimum standard of conduct and procedures for enforcement and sanctions against AIA members who violate the standards certificate of authorization - ANSWER -business license filed with the STATE registration board in order to offer services to the public support staff - ANSWER -employees other than professional staff and senior management outsourcing - ANSWER -contacting with another company to do some of the work needed for a project a way to manage fluctuating workload without going through hiring and firing of staff studio organization - ANSWER -organized around groups responsible for completing the entire project aka vertical organization or tall organization departmental organization - ANSWER -staff organized into groups, each with a specific responsibility within the project aka horizontal organization or flat organization sole prime contract - ANSWER -owner retains one contractor to do all the work
Multiple Prime Contract - ANSWER -an owner agreement where major sections of the work are separately contracted by the owner. design-build - ANSWER -owner retains one firm that both designs and builds a project bridge design-build - ANSWER -owner hires an architect to design thorough schematic design and then design documents are given to modified design-build firm owner-builder - ANSWER -owner is also the constructor, acting as the general contractor and providing most or all of the subcontractors owner-designer - ANSWER -architect is also the owner Indemnification - ANSWER -Hold Harmless provisions - used to assign risk from one responsible party to another Covers the cost of damages from one party to another Often incorporated into contracts as a "hold harmless clause" Limitation of Liability - ANSWER -Assigns caps to the amount of risk a contracting party is responsible for consequential damages are included, for example, owner's lost revenue May take the form of a maximum of: -fees -agreed amounts -insurance based amounts Intellectual Property - ANSWER -Protects the design professionals liability of work usually states the instruments of service may not be used elsewhere design professional retains ownership typically Additional Services - ANSWER -outlined in contract to provide clarity of services included in scope and what is extra custom to each project protects against scope creep contractually agreed upon
Milestone: final CD set. Final specification book. Final client approval. jurisdictional approval bidding and negotiation Phase - ANSWER -Design Phase: architect acts as an adviser to the client on coordinating and selecting a contractor -can happen during construction documents development process. primarily an estimation process -assisting client in preparing the bid package -reviewing bids and selection procedures with clients milestone: at the start of the bid phase, architect provides drawings and specifications. construction administration Phase - ANSWER -Design Phase: Architect observes the performance of "the work" contractor and architect communicate via contractual methods: AIA standard forms Work is completed and paid in stages measured by trade percentages primary responsibility is to the client. Ensures the work meets the standards set forth in the drawings & specifications. Milestones: -all submittals reviewed for the design intent -changes coordinated and drawings reissued -work is evaluated and deemed conforming to the contract documents pre-design phase - ANSWER -additional service: -programming -site and building analysis -cost and feasibility -planning and zoning regulations "due diligence" of project scope, programming, and clients expectations against regulations and budget Milestone: set of documents outlining the goals of the project agreed to by all parties Entitlements Phase - ANSWER -Design Phase: -not a contractual phase - jurisdictional requirement (early design review from planning and zoning)
-ensuring project massing and exterior aesthetic meets requirements of area -designing overall typology and exterior conditions to suit client's goals Due diligence to make sure large systems (what building looks like) comply with owner's desires and zoning and planning regulations Milestone: planning document set to include, code analysis, site plans, floor plans and elevations. must obtain approval to move forward errors and omissions insurance - ANSWER - firm backlogs - ANSWER - tort - ANSWER -Civil wrongs recognized by law as grounds for a lawsuit. These wrongs result in an injury or harm constituting the basis for a claim by the injured party. The correct answer is injury. Integrated Project Delivery - ANSWER -IPD integrated project delivery - ANSWER -makes __________ a good option for working on complex project -uses BIM that enables multiple aspects to be designed congruently -the risk and responsibility is shared with a varied team -management can happen in one location enabling fast turnaround -revisions are minimal freelancer - ANSWER -independent contractors who work for others, usually on a project-by-project basis Accrual Accounting - ANSWER -accounting that records transactions when they occur not necessarily when cash changes hands Deed restriction - ANSWER -Limitations imposed on the use of land and structures by clauses in a deed. restrictive covenants - ANSWER -a statement written into a property deed that restrics the use of land in some way implemented to protect property owners expeditors - ANSWER -keep track of what the group is trying to accomplish and help move the group through the agenda Revenue per employee - ANSWER -Revenue / Total No employees
may have detailed zoning and design requirements -signage -use -special construction requirements -material use and disposal -aesthetic and style Subrogation - ANSWER -Right of the insurer, who has settled the insureds loss to revcover from an at fault third party Deed restriction - ANSWER -PROVISIONS IN A DEED LIMITING the future uses of the property Architects Billing Index - ANSWER -AIA monthly report- economic indicators on construction activity general obligation bonds - ANSWER -a municipal bond that is backed by the issuer's full faith and credit or full taxing authority -issued by state or local government -for acquisition or construction of public facilities -taxpayers $ -must be approved by voters Project Cost Accounting - ANSWER -Tracks revenue, expenses and profit by individual projects market trough - ANSWER -time period she economic output of an economic cycle is at it's lowest point pay when paid clause - ANSWER -AIA C401 stipulates that the prime contractor (architect) only incurs an obligation to pay the consultant if, and only if, it is first paid by the owner utilization rate - ANSWER -direct labor/total labor % Fiduciary Duty - ANSWER -A legal obligation of one party to act in the best interest of another. all-risk policy - ANSWER -policy covering all perils except those specifically excluded Equal Pay Act - ANSWER -1963 law that required both men and women to receive equal pay for equal work
Family Medical Leave Act - ANSWER -Allows employees to take up to 12 weeks per year of unpaid leave in a company with 50+ employees. S corporation - ANSWER -corporation taxed as though it were a partnership with restrictions on shareholders overhead expenses - ANSWER -a form of operating expenses; includes fixed expenses such as rent, utilities, and insurance costs direct salary expense (DSE) - ANSWER -amount paid to firm's work force EXCLUDING benefits Direct Personnel Expense (DPE) - ANSWER -Costs of providing taxes, benefits and the like and are included with the employee's base salary direct salary - ANSWER -hourly rate x chargeable hours indirect salary - ANSWER -hourly rate x unchangeable hours billable revenue - ANSWER -direct salary expense x DSE multiplier employment at will - ANSWER -There is no written contract and employee can be terminated at any time with no explanation Accounts Payable - ANSWER -amounts owed to the suppliers of goods or services that have not yet been paid financial terminology Accounts Receivable - ANSWER -money that others owe to the business through invoices and services financial terminology assets - ANSWER -any type of tangible or intangible resource that can be measured in monetary terms, including current assets, fixed assets and other assets financial terminology chart of accounts - ANSWER -a list of the various accounts a business uses to keep track of money, along with corresponding account numbers used for data processing financial terminology current assets - ANSWER -resources of a business that are converted into cash within one year
financial terminology overhead - ANSWER -expenses incurred in the normal operation of a business financial terminology balance sheet - ANSWER -a financial statement which summarizes all assets and liabilities and shows the financial position of the business financial terminology profit and loss statement - ANSWER -an income statement lists all the income and expenses of a business for a certain period of time financial terminology cash flow statement - ANSWER -financial statement which shows the actual inflows and outflows of cash or cash equivalents financial terminology project progress report - ANSWER -detailed report which shows the hours and labor costs for each phase of a project, both for the current reporting period and the total to date. these numbers are compared to estimated hours and costs financial terminology office earnings report - ANSWER -report which summarizes each of the firm's projects in terms of the amount of revenue it has generated, the expenses it has incurred, unfilled services, percentage of completion, and profit or loss to date financial terminology Aged accounts receivable - ANSWER -a report which shows the status of all invoices for projects, whether or not they have been paid. as well as the 'age' of each invoice financial terminology time analysis report - ANSWER -report which lists each employee along with the number of hours he or she has spent on direct labor, indirect labor, vacation time, sick time and holiday financial terminology current ratio - ANSWER -current assets/current liabilities
a measure of a firms ability to meet current obligations higher is better. ideal range 1.0-1. financial terminology net profit before tax - ANSWER -net revenue - (total annual revenue - consultants' fees and reimburseable expenses financial terminology overhead rate - ANSWER -total indirect expenses/total direct labor ideal range: 1.3-1. multiplied by estimated cost of direct labor and added to total direct labor to help calculate fees financial terminology Quick Ratio - ANSWER -(Cash + Accounts Receivable + revenue earned)/Current Liabilities refinement of current ratio. more conservative because it only includes the most liquid assets commonly included in balance sheets financial terminology revenue per total staff - ANSWER -net revenue produced per staff member per year net operating revenue/# of employees financial terminology Net Multiplier - ANSWER -Net revenue of the firm /Cost of direct labor used to determine billing rates ideal range: 2.7-3. break even rate - ANSWER -cost of operations/cost of direct labor
