Business, Contracts, Estimating, and Project Management
This domain tests contracts, estimates, change orders, and project management under New Jersey consumer rules. Expect questions on written agreements, deposits, overhead and profit, and closeout.
Contracts and business
Use a written contract with scope, price, schedule, payment terms, warranties, and cancellation rights. Home improvement contracts must comply with New Jersey consumer protection rules; provide required notices and keep signed change orders. Carry general liability and workers' compensation as applicable. Do not start work without permits, insurance, and a clear scope.
Estimating
Separate direct costs (materials, labor, equipment) from overhead (office, insurance, vehicles) and profit. Markup on cost is not the same as margin on price. Include permits, disposal, and contingency.
Worked example
Materials are $8,000 and labor is 120 hours at $65 = $7,800. Direct cost = $15,800. Overhead at 15% = $2,370; subtotal = $18,170. Profit at 10% = $1,817; price = $19,987, rounded to $19,990. If you instead add 25% markup, the price is $19,750, which may not cover overhead and profit as intended.
Project management
Sequence rough-in, inspections, startup, and closeout. Track submittals, equipment lead times, and change orders. Document existing conditions and homeowner selections.
What costs marks
- Oral change orders and no written scope.
- Confusing markup with margin.
- Omitting permits, disposal, or overhead.
- No lien notices or closeout documents.
- Underinsuring the business.