CWD Business Operations & Contract Management Flashcards

On a well drilling invoice, 'per-foot pricing' typically covers:

Answer: The cost of drilling each foot of borehole, usually excluding casing, screen, and grout materials

Per-foot drilling prices typically cover only the cost of advancing the borehole and are quoted separately from casing, screen, grout materials, development, pump, and other components listed as line items.

What is the primary purpose of maintaining accurate job cost records for each drilling project?

Answer: To compare estimated vs. actual costs, improve future bidding accuracy, and demonstrate profitability per job

Job cost records allow drillers to compare actual versus estimated costs for each project, improving the accuracy of future bids and identifying which job types are most profitable.

A well drilling company's overhead costs include which of the following?

Answer: Office rent, insurance premiums, and administrative salaries

Overhead costs are indirect expenses not attributable to a specific project, including office rent, insurance premiums, administrative staff, utilities, and other costs of keeping the business running.

When should a well driller notify a client of a potential cost overrun during drilling?

Answer: As soon as unforeseen conditions are encountered, before significant additional costs are incurred

Professional and ethical practice requires notifying the client immediately when unforeseen conditions are encountered so the owner can make informed decisions before significant additional costs accumulate.

For tax purposes, a well drilling company's heavy equipment is typically depreciated using which method under US tax law?

Answer: MACRS (Modified Accelerated Cost Recovery System) with Section 179 expensing options

Under US tax law, business equipment is depreciated using MACRS, which allows accelerated depreciation over defined asset class lives, and Section 179 allows immediate expensing of qualifying equipment purchases.

A well driller's warranty on a new well installation typically covers:

Answer: Workmanship defects and materials for a specified period, but not aquifer yield changes

A standard well driller's warranty covers defects in workmanship and materials for a defined period (commonly 1 year), but cannot guarantee aquifer yield since that depends on hydrogeologic conditions outside the driller's control.