Business and Project Management
What the exam expects
Business and Project Management questions test whether you can run a contracting company as a business, not just build. Expect coverage of contract types (lump-sum, cost-plus, time-and-materials, unit-price), contract documents and their order of precedence, change-order procedure, lien and payment rules, insurance and bonding, and basic scheduling and cost control.
Core concepts
Know the difference between a lien waiver (conditional vs. unconditional, progress vs. final) and a lien notice. Understand retainage, substantial completion, and final completion as distinct milestones with different payment and warranty consequences. Be able to read a simple critical path and explain float. Know what performance and payment bonds guarantee and who is protected by each.
Traps to watch
- Confusing the order of precedence in contract documents; the contract agreement usually governs over specifications and drawings, and written change orders govern over the original scope.
- Assuming a verbal change is binding. Most contracts require changes in writing before work proceeds.
- Mixing up who is protected by a payment bond (subs and suppliers) versus a performance bond (the owner).
- Treating retainage as a penalty rather than a contractual withholding.
Rule of thumb
When a question describes a dispute, ask: what does the contract say, and was it in writing? If no written authorization exists, the contractor generally bears the risk. For schedule questions, the critical path is the longest path with zero float; delaying any activity on it delays the project day-for-day.
Worked example
A 20-day project has a critical path of 20 days and a parallel path with 4 days of float. If the parallel activity slips 6 days, the project slips 2 days (6 − 4), because only the excess beyond float affects completion.