Licensed Electrical Contractor Business and Law Principles 2

Question 1

Under the Davis-Bacon Act, which contractors are required to pay prevailing wages to workers?

Accepted Answer

Contractors on federally funded construction projects over $2,000

Answer

The Davis-Bacon Act requires contractors on federally funded or assisted construction projects over $2,000 to pay workers locally prevailing wages and benefits.

Question 2

A contractor discovers mid-project that completing the work as specified will require substantially more materials than estimated. The BEST course of action is to:

Accepted Answer

Issue a formal change order documenting the additional scope and cost

Answer

A formal change order protects both parties by documenting changes to scope, cost, and timeline before additional work proceeds.

Question 3

What is the primary purpose of workers' compensation insurance for an electrical contracting business?

Accepted Answer

To cover medical costs and lost wages for employees injured on the job

Answer

Workers' compensation insurance covers employees' medical expenses and a portion of lost wages when they suffer work-related injuries or illnesses.

Question 4

An electrical contractor operating as a sole proprietor faces which significant financial risk compared to a corporation?

Accepted Answer

Unlimited personal liability for business debts and lawsuits

Answer

As a sole proprietor, the owner's personal assets are not protected from business liabilities, unlike a corporation where liability is generally limited to business assets.

Question 5

Which contract type places the MOST financial risk on the contractor?

Accepted Answer

Fixed-price (lump sum) contract

Answer

A fixed-price contract requires the contractor to complete the work for the agreed sum regardless of actual costs, placing the risk of cost overruns entirely on the contractor.

Licensed Electrical Contractor Practice Test

Licensed Electrical Contractor Practice Test

Licensed Electrical Contractor Business and Law Principles 2