Financial Acumen for Architects Flashcards
7 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Acumen for Architects flashcards as text
Under AIA A201, a contractor's application for payment must be certified by the architect. What is the architect's responsibility in this process?
Answer: Represent that work has progressed to the point indicated and is in accordance with the contract
By certifying a payment application, the architect represents to the owner that, to the best of their knowledge, the work described has progressed as indicated and quality meets contract requirements.
Which cost-estimating method provides the MOST accurate pre-bid cost estimate?
Answer: Detailed quantity take-off estimate
A detailed quantity take-off, where every material and system is individually measured and priced, provides the most accurate pre-bid estimate with the smallest variance range.
An architect is advising an owner on project financing. Which metric compares annual net operating income to total project cost?
Answer: Cap rate
The capitalization (cap) rate equals net operating income divided by property value or total cost, expressing the property's yield as a percentage.
During construction, the owner requests a significant scope addition costing $200,000. The architect should FIRST:
Answer: Issue a Construction Change Directive and then formalize a Change Order
A Construction Change Directive (CCD) authorizes the contractor to proceed with disputed or urgent changes while the parties negotiate, and is then formalized into a signed Change Order.
A pro forma financial analysis for a proposed mixed-use building would LEAST likely include:
Answer: The architect's errors and omissions insurance premium
A pro forma models the project's financial performance for the owner/investor; the architect's E&O premium is a professional liability cost borne by the architect, not typically itemized in the owner's pro forma.
Which type of contract places the MOST financial risk on the owner for cost overruns?
Answer: Cost-plus-fixed-fee with no cap
A cost-plus-fixed-fee contract with no cap reimburses all actual construction costs plus a fixed fee, exposing the owner to unlimited cost escalation.
An architect calculates that a proposed energy-efficient HVAC system costs $80,000 more than standard equipment but saves $12,000 per year in energy. What is the simple payback period?
Answer: 6.7 years
$80,000 ÷ $12,000/year ≈ 6.7 years simple payback period, ignoring time value of money and maintenance differences.