ARE 5.0 PCM ACTUAL UPDATED Exam
Questions and CORRECT Answers
Party Dispute - CORRECT ANSWER - Problems that arise on a project (i.e. delays,
failures, fee controversies)
Administrative Proceeding - CORRECT ANSWER - Problems that arise from civil
statutes (i.e. licensing, code compliance, regulations)
Standard of Care - CORRECT ANSWER - What a reasonably prudent architect would do,
in the same time and place, given the same or similar facts and circumstances. The law does not
require perfection.
Duty - CORRECT ANSWER - A set of terms or requirements that defines what one
person "owes" another in a particular relationship. They are either stated (codified in contracts,
building codes, building regulations, and zoning documents) or implied (manifested by following
a code of ethics).
Negligence - CORRECT ANSWER - In order to prove negligence, the plaintiff must
prove 4 things: duty, breach, cause, and damage.
Statute of Limitations - CORRECT ANSWER - Time limit within which a claim can be
made. After the time limit, the claim is permanently barred. Each state has its own statute of
limitations on construction claims against architecture, typically 3-10 years.
Statute of Repose - CORRECT ANSWER - Similar to a statute of limitations, except that
the time limit is usually much shorter and doesn't begin until either the problem is first
discovered or substantial completion.
Betterment - CORRECT ANSWER - Typically applies to negligence claims.
,Ex: If the architect forgets to include carpeting in the design, the architect would only be
responsible for a fraction of the cost (i.e. change order fee or premium difference) because the
client would have had to pay for carpeting anyway, had it been shown in the original plans.
Joinder - CORRECT ANSWER - Adding or joining another party to an existing arbitration
Consolidation - CORRECT ANSWER - Act of combining multiple lawsuits into a single
suit
Copyright Law - CORRECT ANSWER - Under copyright law, the architect who prepares
the architectural plans and drawings has ownership. The architect owns the copyright, and the
exclusive legal right to reproduce, publish and sell the drawings.
Provisions for copyright are in AIA Document B101. There is no separate AIA form for
architectural copyright protection.
Instruments of Service - CORRECT ANSWER - Any representations of the tangible and
intangible creative work of the architect and the architect's consultants. Includes studies, surveys,
models, sketches, drawings, specs, etc.
Efficiency-Based Firms - CORRECT ANSWER - Firms that specialize in one project type
or a narrow range of services. Quick turnaround time. Profitability depends on standard
production processes and repeatable project elements.
Experience-Based Firms - CORRECT ANSWER - Firms that have a diversity of project
types. Profitability depends on well-managed projects and skillful use of staff resources.
Expertise-Based Firms - CORRECT ANSWER - Firms headed by starchitects.
Profitability depends on high fees or expert/unique services.
, Unincorporated - CORRECT ANSWER - The individual and the firm are legally one and
the same, so all personal assets are at risk if there is a claim. Unincorporated businesses include
sole proprietorships and partnerships.
Pass-Through Entity - CORRECT ANSWER - A business entity that has no federal tax
liability. Individuals report their shares of the business's income and losses on their personal tax
returns. Includes sole proprietorships, partnerships, S-corporations, and limited liability
companies.
Sole Proprietorship - CORRECT ANSWER - A business owned by one person. Simplest
form of practice. Unincorporated business, so all personal assets are at risk if there is a claim.
Not required to pay federal/income tax; income and expenses are included in the individual's
personal tax return. Partnership dissolves upon the owner's death.
Advantages: ease of setup, total management control by the owner, and possible tax advantages
to the owner
Disadvantages: ability to share ownership and risk, and potential difficulty in raising capital and
establishing credit (depends entirely on the owner's personal credit rating)
General Partnership - CORRECT ANSWER - Owned by 2 or more partners, who may
share ownership equally or unequally. Joint and several liability. Not required to pay
federal/income tax; each partner reports their share of the partnership's profit (or loss) on their
personal tax return.
Joint and Several Liability - CORRECT ANSWER - Each partner is liable for actions of
every other partner, to the full extent of each partner's personal assets.
Limited Partnership - CORRECT ANSWER - A partnership with at least one general
partner and one limited partner.
General partners invest in the business, manage it, and are financially responsible for it. Limited
partners are investors who receive a portion of the profits, but have no say in the management of
the company.
Questions and CORRECT Answers
Party Dispute - CORRECT ANSWER - Problems that arise on a project (i.e. delays,
failures, fee controversies)
Administrative Proceeding - CORRECT ANSWER - Problems that arise from civil
statutes (i.e. licensing, code compliance, regulations)
Standard of Care - CORRECT ANSWER - What a reasonably prudent architect would do,
in the same time and place, given the same or similar facts and circumstances. The law does not
require perfection.
Duty - CORRECT ANSWER - A set of terms or requirements that defines what one
person "owes" another in a particular relationship. They are either stated (codified in contracts,
building codes, building regulations, and zoning documents) or implied (manifested by following
a code of ethics).
Negligence - CORRECT ANSWER - In order to prove negligence, the plaintiff must
prove 4 things: duty, breach, cause, and damage.
Statute of Limitations - CORRECT ANSWER - Time limit within which a claim can be
made. After the time limit, the claim is permanently barred. Each state has its own statute of
limitations on construction claims against architecture, typically 3-10 years.
Statute of Repose - CORRECT ANSWER - Similar to a statute of limitations, except that
the time limit is usually much shorter and doesn't begin until either the problem is first
discovered or substantial completion.
Betterment - CORRECT ANSWER - Typically applies to negligence claims.
,Ex: If the architect forgets to include carpeting in the design, the architect would only be
responsible for a fraction of the cost (i.e. change order fee or premium difference) because the
client would have had to pay for carpeting anyway, had it been shown in the original plans.
Joinder - CORRECT ANSWER - Adding or joining another party to an existing arbitration
Consolidation - CORRECT ANSWER - Act of combining multiple lawsuits into a single
suit
Copyright Law - CORRECT ANSWER - Under copyright law, the architect who prepares
the architectural plans and drawings has ownership. The architect owns the copyright, and the
exclusive legal right to reproduce, publish and sell the drawings.
Provisions for copyright are in AIA Document B101. There is no separate AIA form for
architectural copyright protection.
Instruments of Service - CORRECT ANSWER - Any representations of the tangible and
intangible creative work of the architect and the architect's consultants. Includes studies, surveys,
models, sketches, drawings, specs, etc.
Efficiency-Based Firms - CORRECT ANSWER - Firms that specialize in one project type
or a narrow range of services. Quick turnaround time. Profitability depends on standard
production processes and repeatable project elements.
Experience-Based Firms - CORRECT ANSWER - Firms that have a diversity of project
types. Profitability depends on well-managed projects and skillful use of staff resources.
Expertise-Based Firms - CORRECT ANSWER - Firms headed by starchitects.
Profitability depends on high fees or expert/unique services.
, Unincorporated - CORRECT ANSWER - The individual and the firm are legally one and
the same, so all personal assets are at risk if there is a claim. Unincorporated businesses include
sole proprietorships and partnerships.
Pass-Through Entity - CORRECT ANSWER - A business entity that has no federal tax
liability. Individuals report their shares of the business's income and losses on their personal tax
returns. Includes sole proprietorships, partnerships, S-corporations, and limited liability
companies.
Sole Proprietorship - CORRECT ANSWER - A business owned by one person. Simplest
form of practice. Unincorporated business, so all personal assets are at risk if there is a claim.
Not required to pay federal/income tax; income and expenses are included in the individual's
personal tax return. Partnership dissolves upon the owner's death.
Advantages: ease of setup, total management control by the owner, and possible tax advantages
to the owner
Disadvantages: ability to share ownership and risk, and potential difficulty in raising capital and
establishing credit (depends entirely on the owner's personal credit rating)
General Partnership - CORRECT ANSWER - Owned by 2 or more partners, who may
share ownership equally or unequally. Joint and several liability. Not required to pay
federal/income tax; each partner reports their share of the partnership's profit (or loss) on their
personal tax return.
Joint and Several Liability - CORRECT ANSWER - Each partner is liable for actions of
every other partner, to the full extent of each partner's personal assets.
Limited Partnership - CORRECT ANSWER - A partnership with at least one general
partner and one limited partner.
General partners invest in the business, manage it, and are financially responsible for it. Limited
partners are investors who receive a portion of the profits, but have no say in the management of
the company.
