ARE 5.0 Practice Management- additional
Questions UPDATED ACTUAL Exam
Questions and CORRECT Answers
The principal of a firm with 20 employees needs to hire additional staff to cover the workload of
a newly awarded project. In order to maximize profitability, what is the most important issue that
the principal should consider in deciding what type of staff to hire?
A) skills needed for the new project
B) potential billing rate for new hires
C) workload of existing staff on current projects
D) experience that new hires bring for future projects - CORRECT ANSWER - A - there are
several issues that any employer must consider in hiring. These include short-term needs to
handle an immediate project and long-term requirements for the firm. In this case, the new
project requires someone with specific skills.
The billing rate for the new hire will be sufficient to cover expenses and make a profit, so this is
not a primary concern. If a new employee is needed, it is obvious that existing staff are busy. A
person with broad experience would be valuable for future projects, but this would probably be a
secondary concern when deciding whom to hire.
In order to raise long-term productivity in a midsize firm, what changes to available resources
might the firm make?
A) Hire experienced architects to replace newly licensed staff
B) Relocate to new offices with less space and lower rent
C) Invest in a new building information modeling (BIM) Program instead of a current computer-
aided drafting (CAD) system
D) Require staff to work a minimum number of paid overtime hours - CORRECT ANSWER -
C - A basic measure of productivity in professional service firms is the ratio of output to input. In
the case of an architecture firm, this means producing the most amount of work for the least
amount of time and cost. This can be measured in rations such as revenue per technical staff or
, total billings to total compensation, as well as other financial considerations. Investing in tools to
make it easier for existing staff to do their work faster with a better product is the best change.
Replacing new staff with experienced architects is incorrect. In theory, more experienced staff
could product the same amount of work more quickly and more cost effectively than newly
licensed staff, but more experienced staff would also have to be paid more. Making this kind of
transition is not cost-effective.
Relocating the office is incorrect because productivity in an architectural firm is dependent
primarily on people. Minimizing overhead costs, such as rent, are important, but would not
increase productivity.
Mandatory overtime is not a good general business decision and would be met with resistance
from employees, even though it increases revenue for the same number of staff.
Which of the following requirements apply to a professional architectural corporation? (Choose
the 3 that apply)
A) A certificate of authorization may be required in some states
B) A formal agreement between directors is required by the state
C)Articles of incorporation must be filed with the state's secretary of state
D) A business license is required by the municipality where the firm is located
E) Stockholders, directors, and officers must be licensed architects in the state in which they
practice
F) Duplicate filings of incorporation must be sent to the Internal Revenue Serivce (IRS) -
CORRECT ANSWER - A, C, and E - Some states require a separate certificate of
authorization to allow the firm to conduct business. A formal agreement between the directors is
not required by the state. Corporations, regardless of type, are governed at the state level and
articles of incorporation must be filed with the state's secretary of state.
Municipal business licenses are not required.
Questions UPDATED ACTUAL Exam
Questions and CORRECT Answers
The principal of a firm with 20 employees needs to hire additional staff to cover the workload of
a newly awarded project. In order to maximize profitability, what is the most important issue that
the principal should consider in deciding what type of staff to hire?
A) skills needed for the new project
B) potential billing rate for new hires
C) workload of existing staff on current projects
D) experience that new hires bring for future projects - CORRECT ANSWER - A - there are
several issues that any employer must consider in hiring. These include short-term needs to
handle an immediate project and long-term requirements for the firm. In this case, the new
project requires someone with specific skills.
The billing rate for the new hire will be sufficient to cover expenses and make a profit, so this is
not a primary concern. If a new employee is needed, it is obvious that existing staff are busy. A
person with broad experience would be valuable for future projects, but this would probably be a
secondary concern when deciding whom to hire.
In order to raise long-term productivity in a midsize firm, what changes to available resources
might the firm make?
A) Hire experienced architects to replace newly licensed staff
B) Relocate to new offices with less space and lower rent
C) Invest in a new building information modeling (BIM) Program instead of a current computer-
aided drafting (CAD) system
D) Require staff to work a minimum number of paid overtime hours - CORRECT ANSWER -
C - A basic measure of productivity in professional service firms is the ratio of output to input. In
the case of an architecture firm, this means producing the most amount of work for the least
amount of time and cost. This can be measured in rations such as revenue per technical staff or
, total billings to total compensation, as well as other financial considerations. Investing in tools to
make it easier for existing staff to do their work faster with a better product is the best change.
Replacing new staff with experienced architects is incorrect. In theory, more experienced staff
could product the same amount of work more quickly and more cost effectively than newly
licensed staff, but more experienced staff would also have to be paid more. Making this kind of
transition is not cost-effective.
Relocating the office is incorrect because productivity in an architectural firm is dependent
primarily on people. Minimizing overhead costs, such as rent, are important, but would not
increase productivity.
Mandatory overtime is not a good general business decision and would be met with resistance
from employees, even though it increases revenue for the same number of staff.
Which of the following requirements apply to a professional architectural corporation? (Choose
the 3 that apply)
A) A certificate of authorization may be required in some states
B) A formal agreement between directors is required by the state
C)Articles of incorporation must be filed with the state's secretary of state
D) A business license is required by the municipality where the firm is located
E) Stockholders, directors, and officers must be licensed architects in the state in which they
practice
F) Duplicate filings of incorporation must be sent to the Internal Revenue Serivce (IRS) -
CORRECT ANSWER - A, C, and E - Some states require a separate certificate of
authorization to allow the firm to conduct business. A formal agreement between the directors is
not required by the state. Corporations, regardless of type, are governed at the state level and
articles of incorporation must be filed with the state's secretary of state.
Municipal business licenses are not required.
