FLORIDA CONSTRUCTION INDUSTRY
LICENSING BOARD RESIDENTIAL
CONTRACTOR CONTRACT
ADMINISTRATION EXAM WITH QUESTIONS
AND VERIFIED ANSWERS, PLUS DETAILED
RATIONALES/EXPERT VERIFIED FOR
GUARANTEED PASS 2026/LATEST
UPDATE/INSTANT DOWNLOAD PDF
1. Contract Types
A residential contractor agrees to construct a home for a fixed total price
of $425,000. The contract documents establish the scope, specifications,
materials, and completion requirements before construction begins.
During construction, the contractor's actual costs are lower than
anticipated. Under a typical lump-sum contract, who generally benefits
from the resulting savings?
A. The owner automatically receives the savings
B. The contractor, assuming the required scope is satisfactorily
completed
C. The architect, because the architect prepared the specifications
D. The subcontractors proportionally
Answer: B. The contractor, assuming the required scope is
satisfactorily completed
Rationale: In a lump-sum contract, the contractor generally agrees to
perform the defined scope for a predetermined price. If actual costs
are lower than estimated, the contractor's gross profit generally
increases. Conversely, if costs exceed the contractor's estimate without
an owner-approved change or other contractual entitlement, the
contractor generally bears the additional cost.
1
,2. Cost-Plus Contract
A homeowner hires a residential contractor under a cost-plus contract.
The agreement provides that the owner will reimburse allowable project
costs plus a 12% contractor fee. The contractor purchases $80,000 of
allowable materials and incurs $120,000 in allowable labor costs.
Assuming the 12% fee is calculated on those costs, what is the
contractor's fee?
A. $12,000
B. $20,000
C. $24,000
D. $33,600
Answer: C. $24,000
Rationale: Total allowable cost is $80,000 + $120,000 = $200,000. The
contractor's fee is 12% × $200,000 = $24,000. Under a cost-plus
arrangement, the contract must clearly define which costs are
reimbursable and how the contractor's fee is calculated.
3. Guaranteed Maximum Price
A contractor enters into a guaranteed maximum price contract for
$600,000. The contract permits approved changes but otherwise
establishes $600,000 as the maximum amount payable. The contractor
completes the original scope for $565,000 without any owner-directed
additions. What is the most appropriate conclusion?
A. The contractor automatically receives the entire $600,000 as profit
B. The owner necessarily owes an additional $35,000
C. The contractor's actual cost is $565,000, subject to the contract's
provisions concerning fee, savings, and allowable costs
D. The architect keeps the $35,000 difference
2
,Answer: C. The contractor's actual cost is $565,000, subject to the
contract's provisions concerning fee, savings, and allowable costs
Rationale: A guaranteed maximum price establishes a ceiling subject
to the contract's specific provisions. The treatment of savings below
the GMP depends on the agreement. The contractor does not
automatically receive the unused portion as profit unless the contract
provides for it.
4. Unit-Price Contract
A contractor installs 2,400 square feet of tile under a unit-price
agreement at $9.50 per square foot. What is the contract value for the tile
installation?
A. $2,280
B. $9,500
C. $22,800
D. $24,000
Answer: C. $22,800
Rationale: Unit-price work is calculated by multiplying the actual
quantity by the agreed unit price. Therefore, 2,400 × $9.50 = $22,800.
Accurate quantity measurement and documentation are particularly
important in unit-price contracts.
5. General Conditions
Which item would most appropriately be classified as a general
condition rather than a direct construction cost for a particular installed
component?
A. Concrete used in a foundation footing
B. Lumber used for roof framing
3
, C. Temporary site fencing and project supervision
D. Kitchen cabinets installed in the residence
Answer: C. Temporary site fencing and project supervision
Rationale: General conditions typically include costs necessary to
manage and support the project but not directly incorporated into a
particular finished component. Examples can include supervision,
temporary facilities, project administration, temporary fencing, and
certain site services.
6. Supplemental Conditions
A residential contract contains standard general conditions but also
includes project-specific provisions addressing unusual insurance
requirements, working hours, and special site restrictions. These
provisions are most appropriately described as:
A. Supplemental conditions
B. Unit prices
C. Allowances
D. Change directives
Answer: A. Supplemental conditions
Rationale: Supplemental conditions modify or supplement standard
contract conditions to address requirements specific to the particular
project. They should be reviewed carefully because they can alter
obligations otherwise established by the standard contract conditions.
7. Specifications
The drawings show the location and general dimensions of a window,
while the specifications identify the manufacturer's requirements,
4
LICENSING BOARD RESIDENTIAL
CONTRACTOR CONTRACT
ADMINISTRATION EXAM WITH QUESTIONS
AND VERIFIED ANSWERS, PLUS DETAILED
RATIONALES/EXPERT VERIFIED FOR
GUARANTEED PASS 2026/LATEST
UPDATE/INSTANT DOWNLOAD PDF
1. Contract Types
A residential contractor agrees to construct a home for a fixed total price
of $425,000. The contract documents establish the scope, specifications,
materials, and completion requirements before construction begins.
During construction, the contractor's actual costs are lower than
anticipated. Under a typical lump-sum contract, who generally benefits
from the resulting savings?
A. The owner automatically receives the savings
B. The contractor, assuming the required scope is satisfactorily
completed
C. The architect, because the architect prepared the specifications
D. The subcontractors proportionally
Answer: B. The contractor, assuming the required scope is
satisfactorily completed
Rationale: In a lump-sum contract, the contractor generally agrees to
perform the defined scope for a predetermined price. If actual costs
are lower than estimated, the contractor's gross profit generally
increases. Conversely, if costs exceed the contractor's estimate without
an owner-approved change or other contractual entitlement, the
contractor generally bears the additional cost.
1
,2. Cost-Plus Contract
A homeowner hires a residential contractor under a cost-plus contract.
The agreement provides that the owner will reimburse allowable project
costs plus a 12% contractor fee. The contractor purchases $80,000 of
allowable materials and incurs $120,000 in allowable labor costs.
Assuming the 12% fee is calculated on those costs, what is the
contractor's fee?
A. $12,000
B. $20,000
C. $24,000
D. $33,600
Answer: C. $24,000
Rationale: Total allowable cost is $80,000 + $120,000 = $200,000. The
contractor's fee is 12% × $200,000 = $24,000. Under a cost-plus
arrangement, the contract must clearly define which costs are
reimbursable and how the contractor's fee is calculated.
3. Guaranteed Maximum Price
A contractor enters into a guaranteed maximum price contract for
$600,000. The contract permits approved changes but otherwise
establishes $600,000 as the maximum amount payable. The contractor
completes the original scope for $565,000 without any owner-directed
additions. What is the most appropriate conclusion?
A. The contractor automatically receives the entire $600,000 as profit
B. The owner necessarily owes an additional $35,000
C. The contractor's actual cost is $565,000, subject to the contract's
provisions concerning fee, savings, and allowable costs
D. The architect keeps the $35,000 difference
2
,Answer: C. The contractor's actual cost is $565,000, subject to the
contract's provisions concerning fee, savings, and allowable costs
Rationale: A guaranteed maximum price establishes a ceiling subject
to the contract's specific provisions. The treatment of savings below
the GMP depends on the agreement. The contractor does not
automatically receive the unused portion as profit unless the contract
provides for it.
4. Unit-Price Contract
A contractor installs 2,400 square feet of tile under a unit-price
agreement at $9.50 per square foot. What is the contract value for the tile
installation?
A. $2,280
B. $9,500
C. $22,800
D. $24,000
Answer: C. $22,800
Rationale: Unit-price work is calculated by multiplying the actual
quantity by the agreed unit price. Therefore, 2,400 × $9.50 = $22,800.
Accurate quantity measurement and documentation are particularly
important in unit-price contracts.
5. General Conditions
Which item would most appropriately be classified as a general
condition rather than a direct construction cost for a particular installed
component?
A. Concrete used in a foundation footing
B. Lumber used for roof framing
3
, C. Temporary site fencing and project supervision
D. Kitchen cabinets installed in the residence
Answer: C. Temporary site fencing and project supervision
Rationale: General conditions typically include costs necessary to
manage and support the project but not directly incorporated into a
particular finished component. Examples can include supervision,
temporary facilities, project administration, temporary fencing, and
certain site services.
6. Supplemental Conditions
A residential contract contains standard general conditions but also
includes project-specific provisions addressing unusual insurance
requirements, working hours, and special site restrictions. These
provisions are most appropriately described as:
A. Supplemental conditions
B. Unit prices
C. Allowances
D. Change directives
Answer: A. Supplemental conditions
Rationale: Supplemental conditions modify or supplement standard
contract conditions to address requirements specific to the particular
project. They should be reviewed carefully because they can alter
obligations otherwise established by the standard contract conditions.
7. Specifications
The drawings show the location and general dimensions of a window,
while the specifications identify the manufacturer's requirements,
4
