Business Organization and Operations Flashcards

When submitting a bid for a public project, what is a 'bid bond' designed to ensure?

Answer: That the bidder will not withdraw or modify the bid and will execute the contract if awarded

A bid bond guarantees that if a contractor is the low bidder, they will not withdraw their bid and will enter into the contract at the bid price, protecting the owner from re-bidding costs.

What is the purpose of maintaining a contractor's 'project file' for each job?

Answer: To document all project-related communications, contracts, change orders, and records for reference, dispute resolution, and legal protection

A complete project file protects the contractor by documenting contracts, correspondence, change orders, photos, inspection reports, and other records essential for disputes, audits, and future reference.

Under the Fair Labor Standards Act (FLSA), which workers are entitled to overtime pay at 1.5x their regular rate?

Answer: Non-exempt employees who work more than 40 hours in a workweek

The FLSA requires employers to pay non-exempt employees at least 1.5 times their regular rate for hours worked over 40 in a workweek; exempt employees (salaried above the threshold) are not entitled to overtime.

What is a contractor's 'profit margin' and why is it essential to track?

Answer: The percentage of revenue retained after all expenses; tracking it ensures the business remains financially viable

Profit margin is the percentage of revenue remaining after all costs and expenses; consistently monitoring it helps contractors identify unprofitable jobs, adjust pricing, and ensure business sustainability.

What is the primary purpose of an 'organizational chart' for a construction company?

Answer: To clearly define reporting relationships, roles, and responsibilities within the company

An organizational chart visually maps the company's hierarchy and reporting relationships, clarifying authority, accountability, and communication channels across the organization.

Which of the following is a contractor MOST likely to do to protect their business during an economic downturn?

Answer: Reduce overhead costs, focus on profitable niches, and maintain strong client relationships

During economic downturns, successful contractors control overhead, focus on their most profitable work types, maintain relationships with reliable clients, and protect cash flow.