Business and Project Management
Core concepts
Business questions test estimating, contracts, scheduling, and jobsite management. Know how to build a bid from labor, material, equipment, overhead, and profit; understand change orders, retainage, and lien rights; and read a basic schedule (critical path, float). Know the difference between a lump-sum and time-and-materials contract and who bears risk in each.
Traps in questions
- Overhead vs. profit: overhead recovers operating costs; profit is return. Answers that lump them together misstate the bid.
- Change orders: verbal changes are risky; get written authorization before extra work. Options that "do the work and bill later" without documentation are wrong.
- Critical path: the longest path through the schedule sets project duration. Delaying a task with float may not delay the project.
- Retainage: a percentage held until acceptance; it is not a discount.
Worked example
A job has $8,000 material, 120 labor hours at $65/hr, and 15% overhead plus 10% profit. Labor = 120 x 65 = $7,800. Subtotal = 8,000 + 7,800 = $15,800. With overhead = 15,800 x 1.15 = $18,170. With profit = 18,170 x 1.10 = $19,987. Apply overhead and profit in the stated order; reversing them changes the answer.
Rule of thumb
Document every change in writing before performing it; undocumented work is hard to collect.