Business and Project Management for General Contractors
What the exam expects
Business and project management questions test whether you can run a contracting company as a business, not just build. Core concepts include estimating and bidding, scheduling, cost control, cash flow, contract types, and risk management.
Estimating and bidding
Understand direct costs (labor, materials, equipment) versus indirect costs (overhead, supervision, insurance, permits) versus profit and contingency. A common error is omitting general conditions or contingency from a bid. Change orders must be priced and documented before work proceeds.
Scheduling
Know the difference between a Gantt/bar chart and the critical path method (CPM). CPM identifies the critical path - the longest sequence of dependent activities - which determines the shortest project duration. Float (slack) is the amount of time an activity can slip without delaying the project; activities on the critical path have zero float. Traps ask which activity delay affects completion - only critical-path delays do unless float is exhausted.
Cost control and cash flow
Track budgeted vs. actual costs and use earned value concepts: cost variance and schedule variance. Contractors must manage retainage, progress billing, and lien waivers to keep cash flowing. Overhead must be recovered across jobs.
Risk and contracts
Know lump sum, cost-plus, time and materials, and unit price contracts and who bears risk in each. Understand bonding (performance and payment bonds), insurance (general liability, workers' comp), and subcontractor management.
Worked example
If an activity has 5 days of float and slips 3 days, the project completion date is unchanged. If it slips 7 days, completion is delayed by 2 days.
Traps
Confusing float with total duration, or assuming any delay delays the project.