PRACTICE MANAGEMENT (PCM) EXAM
QUESTIONS WITH 100% CORRECT
ANSWERS
What missing trait could erode leadership and credibility? - ANSWER-Accountability.
Comptroller - ANSWER-A person in a management position who controls all the
financial and accounting activity of the firm.
Leadership concepts for architects - ANSWER-Behavioral
theory-Contingency/situational leadership-Transactional/transformational leadership-
Level 5
Contingency/situational leadership - ANSWER-Characterized by using a variety of
leadership behaviors along with the ability to adapt and apply those behaviors in
response to situations.
Transactional/transformational leadership - ANSWER-Transactions are trades or deals.
Leadership within this trading environment leads to transformations in both themselves
and others.
Level 5 leadership - ANSWER-A Level 5 leader is one who achieves greatness by
combining humility with a high level of ambition, will, maturity, and diligence that
endures over time. It is the highest level of leadership.
Behavioral theory - ANSWER-A theory developed by psychologists that says that all
behavior is acquired through conditioning. It is a foundational concept in leadership
training.
Exculpatory clauses - ANSWER-Phrases that try to shift responsibility to the contractor
or someone else in a broad, general way.
Multiple of direct personnel expense - ANSWER-The direct salary per person is
multiplied by a factor that accounts for taxes, sick leave, health care, overhead, and
profit.
Mediation - ANSWER-A voluntary, confidential process often mandated by contract
where a neutral third party helps achieve resolution in a dispute.
Arbitration - ANSWER-A method of dispute resolution in which an arbitrator evaluates
the merits of the positions of the respective parties and renders a decision.
,Mechanic's lien - ANSWER-A claim by one party against the property of another for a
debt. This is a common method used for an architect, contractor, or material supplier to
collect past due payments.
Surety bond - ANSWER-Protects the owner against default by the contractor.
Compensation - ANSWER-Exchange of money or something of value for a service.
Employees exchange time, knowledge, and talent for financial and nonfinancial
rewards.
Title 1 of Americans with Disabilities Act - ANSWER-Prohibits private, state, and local
governments; employment agencies; and labor unions from discriminating against
qualified individuals with disabilities in job application procedures, compensation,
advancement, job training, and other privileges of employment.
Profit sharing - ANSWER-When a firm sets aside a percentage of salary for employees
based on the firm's overall profitability or the profitability of a particular division or office.
Claims-made policies - ANSWER-For professional liability insurance, this means that
the date the claim is finally made is the triggering event for coverage.
Indemnification - ANSWER-This is a hold-harmless provision, an agreement by one
party to pay certain specified losses or damages incurred by another party.
Professional liability insurance - ANSWER-Sometimes called errors and omissions
insurance, the policy agrees to defend and pay on behalf of the architect for claims
alleging an error or negligence in the performance of professional duties in exchange for
the premiums paid to the insurance company.
Net multiplier - ANSWER-Shows how much revenue comes in for each dollar paid out
to staff. This is a common way to evaluate staff productivity and is calculated by net
revenue or direct salary expense.
Legal exposure - ANSWER-During the practice of architecture, architects are exposed
to risks by the fact that the nature of the work they do can have an impact on others.
Legal exposure consists of "liability" and "damages."
Liability - ANSWER-To have liability means to be responsible for circumstances that
lead to another person's grievance.
Damages - ANSWER-Damages refers to the monetary compensation ordered to be
paid to a party based on loss or injury through the wrongful conduct of another party.
Professional malpractice - ANSWER-To fall short of the standard of care through
negligence, breach of contract, or both.
,Breach of contract - ANSWER-When a party to a contract does not follow through with
responsibilities outlined in the contract.
Common law - ANSWER-The United States operates under what is called common law.
It means that the foundation of our law system is based on case studies and decisions
made in courts of law.
Statute of repose - ANSWER-A statute of repose is a statute that cuts off certain legal
rights if not acted upon by a specified deadline. In the context of construction, it is the
time limit within which you can discover a defect in the work. The statute of repose
typically begins at substantial completion. The time limit is set by the state and can vary,
but in many states, it is 10 years. For example, 9 years after substantial completion, a
roof leak is discovered. The builder or designer, whoever is responsible, is liable
because the discovery was made within the 10-year statute of repose. If the leak is
discovered 1 day after the 10-year mark, the statute of repose has run out, and the
designer or builder is not liable.
Statute of limitations - ANSWER-A statute of limitations is a limitation put on the time
period after damage or an injury occurs that a person has to bring legal action against
the party responsible for the injury. It is to encourage timely lawsuits. Example: A piece
of roofing falls off a building and hits a passerby. If the statute of limitations is 4 years,
that is how long the passerby has to sue whomever is responsible. If the piece of
roofing hit the passerby in the 9th year of a 10-year statute of repose, they would still
have 4 years from the date of the incident to bring legal action.
Tort - ANSWER-Wrongful injury to a person's person or a person's property. It differs
from a crime or breach of contract, both of which are wrongs . Tort is a civil action. An
example of tort is negligence.
Tortfeasor - ANSWER-A tortfeasor is someone who commits an act of tort.
Agent vs. vendor - ANSWER-The architect is the agent of the owner. Agency is a legal
concept meaning the architect is authorized to make decisions on behalf of the owner.
The contractor is a vendor. The contractor's job is to carry out the contract and, in doing
so, putting his or her own interests first.
COBRA - ANSWER-Under COBRA, a terminated employee may retain his or her health
insurance plan for a period of time if he or she pays the premium.
True or false: Workers' compensation is a type of insurance that protects employees
with work-related injuries from loss of income and medical expenses. - ANSWER-True.
Expert witness - ANSWER-Somebody who testifies in a case and can offer the judge,
jury, mediator, or arbitrator an interpretation on matters that he or she is an expert in.
, Duty - ANSWER-A legal term describing an obligation of a party to another. A duty may
be explicit or implicit.
Certificate of merit - ANSWER-An affidavit required by some states precedent to filing
suit against a design professional prepared by a third-party design professional attesting
to the factual basis of the negligent act; intended to protect against baseless claims.
Consent of surety - ANSWER-Written consent of the surety on a performance bond,
payment bond, or both to changes in the contract, reductions in the contractor's
retainage, transfer of final payment to the contractor, or waiver of notification of contract
changes.
Consequential loss - ANSWER-Loss not directly caused by damage to property but may
arise as a result of such damage (damage to other portions of a building or its contents
caused by leaks).
Civil action - ANSWER-A lawsuit in court seeking enforcement or protection of private
rights.
Compensatory damages - ANSWER-Damages awarded to compensate a plaintiff for
his or her injuries; includes direct out-of-pocket losses as well as compensation for pain
and suffering.
American Institute of Architects (AIA) - ANSWER-The primary professional organization
of architects and allied professionals within the United States. The AIA provides
architects with a support network to further their careers and the profession as a whole.
FICA - ANSWER-Stands for Federal Insurance Contributions Act. It is a payroll tax to
fund Medicare and Social Security. Employees and employers share the cost of the tax,
which is 15.3%. Employee and employer each pay 6.2% in Social Security and 1.45% in
Medicare taxes, making the total Social Security tax 12.4% of wages and the total
Medicare tax 2.9%, for a total of 15.3%. Self-employed people are responsible for the
entire FICA percentage of 15.3% (12.4% + 2.9%) because they are, in a sense, both the
employer and the employed.
SECA - ANSWER-The name of the FICA tax for self-employed people.
Standard deduction - ANSWER-A dollar amount that taxpayers can deduct from their
income before calculating taxes, if they don't itemize.
Itemized deduction - ANSWER-Eligible expenses claimed by taxpayers on their tax
returns to reduce their taxable income. If you itemize, you cannot take the standard
deduction.
Withholding - ANSWER-Money withheld from an employee's paycheck that goes
directly to the government to pay for income taxes.
QUESTIONS WITH 100% CORRECT
ANSWERS
What missing trait could erode leadership and credibility? - ANSWER-Accountability.
Comptroller - ANSWER-A person in a management position who controls all the
financial and accounting activity of the firm.
Leadership concepts for architects - ANSWER-Behavioral
theory-Contingency/situational leadership-Transactional/transformational leadership-
Level 5
Contingency/situational leadership - ANSWER-Characterized by using a variety of
leadership behaviors along with the ability to adapt and apply those behaviors in
response to situations.
Transactional/transformational leadership - ANSWER-Transactions are trades or deals.
Leadership within this trading environment leads to transformations in both themselves
and others.
Level 5 leadership - ANSWER-A Level 5 leader is one who achieves greatness by
combining humility with a high level of ambition, will, maturity, and diligence that
endures over time. It is the highest level of leadership.
Behavioral theory - ANSWER-A theory developed by psychologists that says that all
behavior is acquired through conditioning. It is a foundational concept in leadership
training.
Exculpatory clauses - ANSWER-Phrases that try to shift responsibility to the contractor
or someone else in a broad, general way.
Multiple of direct personnel expense - ANSWER-The direct salary per person is
multiplied by a factor that accounts for taxes, sick leave, health care, overhead, and
profit.
Mediation - ANSWER-A voluntary, confidential process often mandated by contract
where a neutral third party helps achieve resolution in a dispute.
Arbitration - ANSWER-A method of dispute resolution in which an arbitrator evaluates
the merits of the positions of the respective parties and renders a decision.
,Mechanic's lien - ANSWER-A claim by one party against the property of another for a
debt. This is a common method used for an architect, contractor, or material supplier to
collect past due payments.
Surety bond - ANSWER-Protects the owner against default by the contractor.
Compensation - ANSWER-Exchange of money or something of value for a service.
Employees exchange time, knowledge, and talent for financial and nonfinancial
rewards.
Title 1 of Americans with Disabilities Act - ANSWER-Prohibits private, state, and local
governments; employment agencies; and labor unions from discriminating against
qualified individuals with disabilities in job application procedures, compensation,
advancement, job training, and other privileges of employment.
Profit sharing - ANSWER-When a firm sets aside a percentage of salary for employees
based on the firm's overall profitability or the profitability of a particular division or office.
Claims-made policies - ANSWER-For professional liability insurance, this means that
the date the claim is finally made is the triggering event for coverage.
Indemnification - ANSWER-This is a hold-harmless provision, an agreement by one
party to pay certain specified losses or damages incurred by another party.
Professional liability insurance - ANSWER-Sometimes called errors and omissions
insurance, the policy agrees to defend and pay on behalf of the architect for claims
alleging an error or negligence in the performance of professional duties in exchange for
the premiums paid to the insurance company.
Net multiplier - ANSWER-Shows how much revenue comes in for each dollar paid out
to staff. This is a common way to evaluate staff productivity and is calculated by net
revenue or direct salary expense.
Legal exposure - ANSWER-During the practice of architecture, architects are exposed
to risks by the fact that the nature of the work they do can have an impact on others.
Legal exposure consists of "liability" and "damages."
Liability - ANSWER-To have liability means to be responsible for circumstances that
lead to another person's grievance.
Damages - ANSWER-Damages refers to the monetary compensation ordered to be
paid to a party based on loss or injury through the wrongful conduct of another party.
Professional malpractice - ANSWER-To fall short of the standard of care through
negligence, breach of contract, or both.
,Breach of contract - ANSWER-When a party to a contract does not follow through with
responsibilities outlined in the contract.
Common law - ANSWER-The United States operates under what is called common law.
It means that the foundation of our law system is based on case studies and decisions
made in courts of law.
Statute of repose - ANSWER-A statute of repose is a statute that cuts off certain legal
rights if not acted upon by a specified deadline. In the context of construction, it is the
time limit within which you can discover a defect in the work. The statute of repose
typically begins at substantial completion. The time limit is set by the state and can vary,
but in many states, it is 10 years. For example, 9 years after substantial completion, a
roof leak is discovered. The builder or designer, whoever is responsible, is liable
because the discovery was made within the 10-year statute of repose. If the leak is
discovered 1 day after the 10-year mark, the statute of repose has run out, and the
designer or builder is not liable.
Statute of limitations - ANSWER-A statute of limitations is a limitation put on the time
period after damage or an injury occurs that a person has to bring legal action against
the party responsible for the injury. It is to encourage timely lawsuits. Example: A piece
of roofing falls off a building and hits a passerby. If the statute of limitations is 4 years,
that is how long the passerby has to sue whomever is responsible. If the piece of
roofing hit the passerby in the 9th year of a 10-year statute of repose, they would still
have 4 years from the date of the incident to bring legal action.
Tort - ANSWER-Wrongful injury to a person's person or a person's property. It differs
from a crime or breach of contract, both of which are wrongs . Tort is a civil action. An
example of tort is negligence.
Tortfeasor - ANSWER-A tortfeasor is someone who commits an act of tort.
Agent vs. vendor - ANSWER-The architect is the agent of the owner. Agency is a legal
concept meaning the architect is authorized to make decisions on behalf of the owner.
The contractor is a vendor. The contractor's job is to carry out the contract and, in doing
so, putting his or her own interests first.
COBRA - ANSWER-Under COBRA, a terminated employee may retain his or her health
insurance plan for a period of time if he or she pays the premium.
True or false: Workers' compensation is a type of insurance that protects employees
with work-related injuries from loss of income and medical expenses. - ANSWER-True.
Expert witness - ANSWER-Somebody who testifies in a case and can offer the judge,
jury, mediator, or arbitrator an interpretation on matters that he or she is an expert in.
, Duty - ANSWER-A legal term describing an obligation of a party to another. A duty may
be explicit or implicit.
Certificate of merit - ANSWER-An affidavit required by some states precedent to filing
suit against a design professional prepared by a third-party design professional attesting
to the factual basis of the negligent act; intended to protect against baseless claims.
Consent of surety - ANSWER-Written consent of the surety on a performance bond,
payment bond, or both to changes in the contract, reductions in the contractor's
retainage, transfer of final payment to the contractor, or waiver of notification of contract
changes.
Consequential loss - ANSWER-Loss not directly caused by damage to property but may
arise as a result of such damage (damage to other portions of a building or its contents
caused by leaks).
Civil action - ANSWER-A lawsuit in court seeking enforcement or protection of private
rights.
Compensatory damages - ANSWER-Damages awarded to compensate a plaintiff for
his or her injuries; includes direct out-of-pocket losses as well as compensation for pain
and suffering.
American Institute of Architects (AIA) - ANSWER-The primary professional organization
of architects and allied professionals within the United States. The AIA provides
architects with a support network to further their careers and the profession as a whole.
FICA - ANSWER-Stands for Federal Insurance Contributions Act. It is a payroll tax to
fund Medicare and Social Security. Employees and employers share the cost of the tax,
which is 15.3%. Employee and employer each pay 6.2% in Social Security and 1.45% in
Medicare taxes, making the total Social Security tax 12.4% of wages and the total
Medicare tax 2.9%, for a total of 15.3%. Self-employed people are responsible for the
entire FICA percentage of 15.3% (12.4% + 2.9%) because they are, in a sense, both the
employer and the employed.
SECA - ANSWER-The name of the FICA tax for self-employed people.
Standard deduction - ANSWER-A dollar amount that taxpayers can deduct from their
income before calculating taxes, if they don't itemize.
Itemized deduction - ANSWER-Eligible expenses claimed by taxpayers on their tax
returns to reduce their taxable income. If you itemize, you cannot take the standard
deduction.
Withholding - ANSWER-Money withheld from an employee's paycheck that goes
directly to the government to pay for income taxes.
