VA Contractor Business Exams flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Markup versus margin

Markup is gross profit divided by cost; margin is gross profit divided by price. A 25 percent markup yields only a 20 percent margin, so price equals cost divided by (1 minus margin).

Current ratio

Current assets divided by current liabilities. It measures whether short-term assets can cover obligations due within a year; a result below 1.0 signals liquidity strain.

Working capital

Current assets minus current liabilities. It is the cash cushion a contractor uses to pay crews and suppliers while waiting for progress payments to arrive.

Break-even point

The revenue level at which total revenue equals total cost, calculated as fixed overhead divided by the contribution margin ratio. Profit accrues only on revenue above this level.

Limited liability company

A business entity formed by filing articles of organization with the Virginia State Corporation Commission; it shields owners' personal assets from business debts and is taxed separately or as a pass-through.

Retainage receivable

The portion of each progress payment withheld by the owner until completion. The contractor records it as a current asset rather than as cash already collected.

Cost of goods sold

The direct job costs charged to a project, including labor, materials, equipment, and subcontracts. Gross profit equals contract revenue minus these direct costs.

Overhead

Indirect business costs such as office rent, insurance, and owner salaries that cannot be charged to one job. It is recovered by applying markup to each project's direct costs.

Class A license

A Virginia contractor license with no dollar limit on any single contract. It requires the highest level of documented experience and financial statement review by the Board for Contractors.

Class B license

A Virginia contractor license permitting any single contract up to $120,000. Work exceeding that amount on one contract requires the firm to hold a Class A license.

Class C license

A Virginia contractor license limited to single contracts of $10,000 or less. Projects below $1,000 in total value require no contractor license at all.

Contractor Transaction Recovery Fund

A DPOR-administered fund, financed by assessments on licensees, that pays eligible court judgments obtained against licensed Virginia contractors who fail to satisfy them.

Mechanic's lien deadline

In Virginia a memorandum of lien is generally recorded within 90 days after the last day of the month in which the claimant last furnished labor or materials to the project.

State prompt payment rule

Virginia agencies must pay properly submitted invoices within 30 days of receipt; the prime contractor then has 7 days after receiving that payment to pay its subcontractors.

Licensing dollar threshold

A Virginia contractor license is required whenever the total value of a project, counting both labor and materials, is $1,000 or more.

Board for Contractors

The DPOR subunit that licenses Virginia contractors, approves and administers licensing examinations, and disciplines licensees for violations of the statutes and board regulations.

Bid bond

A surety guarantee, typically 5 percent of the bid amount, that the bidder will execute the contract and furnish required bonds if awarded; the owner keeps it if the bidder defaults.

Performance bond

Surety coverage, usually 100 percent of the contract amount, guaranteeing that the contractor will complete the work in accordance with the contract documents.

Pay-if-paid clause

Contract language making the owner's payment a condition precedent to the prime contractor's obligation to pay a subcontractor, so the subcontractor bears the risk of owner nonpayment.

Change order

A written modification signed by the owner or an authorized representative that changes the contract's scope, price, or time, and that becomes part of the contract documents.

Liquidated damages

A pre-agreed sum, often stated per day of delay, that the owner may collect for late completion. It is enforceable when it reasonably forecasts actual loss rather than punishing delay.

Addendum

A written modification to the bidding documents issued before bid opening that becomes part of the contract; bidders must acknowledge each addendum in their submitted bid.

Unit price contract

A contract paying a stated price for each measured unit of work actually performed. The final amount depends on actual quantities, so the owner carries quantity risk.

Burdened labor rate

The hourly wage plus payroll taxes, workers' compensation premiums, liability insurance, and fringe benefits. Estimates must use this rate rather than the bare hourly wage.

Competent person

Under OSHA, an individual who can identify existing and predictable hazards in the surroundings and who has authority to take prompt corrective measures to eliminate them.

Fall protection trigger height

OSHA construction rules require fall protection at 6 feet above a lower level on most walking-working surfaces; scaffold platforms require it at 10 feet.

Excavation protective system

Required for trenches 5 feet deep or more unless the excavation is entirely in stable rock; the system must be designed or selected by a competent person.

Focus Four hazards

Falls, struck-by, caught-in/between, and electrocutions. OSHA identifies these four categories as the leading causes of fatalities in the construction industry.

Critical path

The sequence of dependent activities with zero total float that determines the shortest possible project duration; any delay along it delays the entire project.

Total float

The amount of time an activity can be delayed without delaying the project finish date. It equals late start minus early start, or late finish minus early finish.

OSHA fatality reporting

Employers must report a work-related fatality to OSHA within 8 hours, and an in-patient hospitalization, amputation, or loss of an eye within 24 hours.

GFCI requirement

On construction sites, temporary 120-volt receptacles must have ground-fault circuit protection unless the employer maintains an assured equipment grounding conductor program.