Virginia General Contractor Exam Flashcards

Q: Which Virginia contractor exam portions does my license class require?

Class A requires all three Designated Employee portions: Virginia, General, and Advanced. Class B requires the Virginia and General portions only. Class C does not require these business portions at all - Class C applicants deal only with the classification or specialty requirements described in PSI's separate specialty exam bulletin. This is the single most common point of confusion, because Class C applicants often study for an exam they never have to take.

Q: How many questions are on the Virginia contractor exam and what score do I need?

Each portion is scored on its own. The Virginia Portion has 24 items, requires 18 correct, and allows 48 minutes. The General Portion has 50 items, requires 35 correct, and allows 100 minutes. The Advanced Portion has 24 items, requires 17 correct, and allows 60 minutes. PSI may also add five to ten unscored experimental questions, which do not count against your score or your time.

Q: Is the Virginia contractor exam open book?

Yes. All three portions are open book, but PSI does not supply the references - you bring your own. The two primary references are the NASCLA Contractors Guide to Business Law and Project Management, Virginia 11th edition, and the Virginia Uniform Statewide Building Code, 2021 edition. Study guides are not allowed, loose or unbound papers are not allowed, and books may be highlighted, underlined, or indexed beforehand but must contain no handwriting. Only permanent tabs are permitted.

Q: How long do my Virginia contractor exam scores stay valid?

Board policy makes scores valid for one year. If you do not pass every portion your class requires within one year of your initial examination, you must retake the entire examination. Class A candidates nearing that deadline who have passed the Virginia and General portions but not the Advanced portion may instead apply for a Class B license and later pass the Advanced portion to upgrade to Class A.

Q: Does passing a NASCLA exam replace the Virginia business portions?

No. Virginia has accepted NASCLA Accredited Examination scores for the Commercial Building Contractor classification since January 1, 2016, but that satisfies a technical classification requirement. It is a different requirement from the Designated Employee business portions, which a Class A or Class B firm must still satisfy. Keep the two tracks separate: the business portions qualify the Designated Employee, and the classification exam or credential qualifies the Qualified Individual.

Q: What does the Virginia contractor exam cost, and can I reschedule?

PSI charges $40 for one portion, $72 for two portions, and $85 for three portions. Fees are neither refundable nor transferable and are valid for one year from the date of payment. You may cancel or reschedule without forfeiting the fee only if PSI receives your notice at least two days before the scheduled date, and a voicemail or email does not count as valid cancellation.

Q: What is the pass rate for the Virginia contractor exam?

Neither DPOR nor PSI publishes a pass rate for these portions, so any figure you see quoted elsewhere is not an official statistic. Judge your readiness by the published passing scores instead: 75 percent on the Virginia Portion (18 of 24), 70 percent on the General Portion (35 of 50), and about 71 percent on the Advanced Portion (17 of 24).

Question 1

What determines whether a Virginia contractor needs a Class A, B, or C license?

Accepted Answer

Contract value, not skill or trade. Class C: a single project over $1,000 but under $30,000, or under $250,000 in any 12 months. Class B: $30,000 to under $150,000, or $250,000 to under $1 million. Class A: $150,000 or more, or $1 million or more in 12 months. Either trigger alone bumps you up a class.

Question 2

Who actually holds a Virginia contractor license - the firm or the individual?

Accepted Answer

The firm. DPOR issues the license to the business entity, and two individuals support it: the Designated Employee passes the business exam portions, and the Qualified Individual supplies the trade experience for each classification or specialty. Both must be 18 or older and either a full-time employee or a member of responsible management.

Question 3

What is the penalty for contracting in Virginia without the required license?

Accepted Answer

A Class 1 misdemeanor plus a fine of up to $500 for each day of the violation. Worse commercially, an unlicensed contractor cannot enforce its own contract unless it both gave substantial performance in good faith and had no actual knowledge a license was required - and simply letting a license lapse is presumed to be actual knowledge.

Question 4

How many years of experience must the Qualified Individual have, by license class?

Accepted Answer

Five years for Class A, three years for Class B, one year for Class C. The experience must be in the specific classification or specialty being qualified, and it is counted per classification - a firm adding a second classification needs a Qualified Individual with the right experience for that one too.

Question 5

What financial responsibility must a Virginia contractor firm demonstrate?

Accepted Answer

Class A must verify net worth or equity of $45,000; Class B must verify $15,000; Class C has no minimum. Either class may substitute a $50,000 surety bond written on the Board's own bond form instead of documenting net worth, which is the usual route for a new firm with a thin balance sheet.

Question 6

What prelicense education does Virginia require before issuing a contractor license?

Accepted Answer

Eight hours of a Board-approved basic business course, required for Class A, B, and C alike. For Class A and B the Designated Employee or a member of responsible management takes it; for Class C a member of responsible management does. It is a separate requirement from the PSI exam portions - passing the exam does not waive the course.

Question 7

What are the three parts of the Virginia Uniform Statewide Building Code (USBC)?

Accepted Answer

The Virginia Construction Code (new construction), the Virginia Existing Building Code (repair, alteration, and change of occupancy), and the Virginia Maintenance Code (upkeep of existing structures). The Board of Housing and Community Development adopts the USBC. The 2021 edition took effect January 18, 2024 and became mandatory for permit applications submitted after January 17, 2025.

Question 8

Who enforces the USBC and issues building permits in Virginia?

Accepted Answer

The local building department of each city or county enforces the code, issues permits, and performs inspections. DHCD writes and maintains the code statewide. The key consequence is preemption: the USBC is a uniform statewide standard that supersedes local building codes, so a locality cannot impose its own stricter construction requirements.

Question 9

How much can a consumer recover from the Virginia Contractor Transaction Recovery Fund?

Accepted Answer

Up to $30,000 for one claimant against one contractor arising from a single transaction, and that cap includes anything already paid by the contractor's bond. Claims against any one contractor are capped at $100,000 total per biennium; if claims exceed that, the Board prorates the $100,000 among claimants in proportion to their judgments.

Question 10

How is the Contractor Transaction Recovery Fund paid for?

Accepted Answer

By a $25 assessment each contractor pays at application. The Fund must hold at least $400,000; if the balance drops below that, the Board levies an additional assessment at renewal, capped at $50 per licensee per biennium. Ignoring the notice is costly - the license is automatically suspended if the assessment goes unpaid.

Question 11

What must a consumer have in hand before filing a Recovery Fund claim?

Accepted Answer

A final Virginia court judgment, no longer appealable, based on improper or dishonest conduct that occurred while the contractor was licensed and in connection with a contracting transaction. The verified claim must reach the Director within 12 months of that final judgment. The Fund does not cover ordinary contract or quality disputes, and it never covers an unlicensed operator.

Question 12

How much land disturbance triggers Virginia erosion and sediment control requirements?

Accepted Answer

10,000 square feet or more statewide, dropping to just 2,500 square feet or more inside a designated Chesapeake Bay Preservation Area. An individual residential lot disturbing less than 10,000 square feet is still regulated if the development as a whole reaches the 10,000 square foot threshold.

Question 13

How does liability differ among a sole proprietorship, a general partnership, and an LLC or corporation?

Accepted Answer

A sole proprietor and general partners are personally liable for all business debts, and each general partner can bind the others by his or her own acts. An LLC or corporation is a separate legal entity, so owners generally risk only what they invested - but only if the entity is adequately funded and its finances are kept genuinely separate from personal accounts.

Question 14

Markup vs margin: price a $10,000 job cost at 20 percent of each.

Accepted Answer

Markup is figured on cost; margin is figured on the selling price. A 20 percent markup gives a $12,000 price, but that is only a 16.7 percent margin. To truly earn a 20 percent margin, divide cost by 0.80, giving $12,500. Confusing the two is the classic arithmetic behind chronic underbidding.

Question 15

What is a quantity takeoff?

Accepted Answer

The measured count of materials and labor pulled from the drawings and specifications before any pricing is applied. Because every later number is built on it, a takeoff error carries straight through to the final bid undetected. That is why takeoff accuracy is checked separately from pricing accuracy.

Question 16

Direct (job) cost vs indirect (overhead) cost

Accepted Answer

Direct costs are traceable to one job: its materials, its labor, its equipment, its permits. Indirect costs such as office rent, general insurance, estimator salaries, and the truck fleet support every job at once. Indirect costs cannot be billed to any single project and must be recovered through a markup spread across the year's expected volume.

Question 17

What does a bid bond guarantee?

Accepted Answer

That if the contractor's bid is accepted, it will sign the contract and furnish the required performance and payment bonds. If the contractor walks away, the surety pays the owner the difference between that bid and the next acceptable one, up to the bond amount. It guarantees the bid, not the quality or completion of the work.

Question 18

Allowance vs contingency in a bid

Accepted Answer

An allowance is a stated dollar placeholder for a scope item the owner has not yet selected, such as $8,000 for flooring, and it is reconciled up or down once the selection is made. A contingency is the contractor's own reserve for unforeseen conditions, is not tied to a specific item, and is not reconciled with the owner.

Question 19

Conceptual (square-foot) estimate vs detailed estimate

Accepted Answer

A conceptual estimate applies historical cost per square foot or per unit to incomplete design information and is meant for feasibility and budgeting only. A detailed estimate prices an actual takeoff of every material and labor item from complete drawings and specifications, and it is the only sound basis for a firm lump-sum bid.

Question 20

Lump sum (stipulated sum) contract

Accepted Answer

One fixed price for a defined scope of work. The contractor absorbs any cost overrun and keeps any savings, so the cost risk sits with the contractor while the owner gets price certainty. It only works when the drawings and specifications are complete enough to define scope precisely; incomplete documents turn it into a change-order fight.

Question 21

Cost-plus-fee contract, and what a GMP adds to it

Accepted Answer

The owner reimburses actual job costs and pays a fee that is either a fixed amount or a percentage, so the owner carries the cost risk. A guaranteed maximum price caps the owner's total exposure: the contractor absorbs everything above the GMP. Adding a GMP therefore shifts overrun risk back to the contractor above the cap.

Question 22

Unit price contract

Accepted Answer

Payment is a fixed price per unit - per cubic yard, per linear foot - multiplied by the quantity actually installed. It fits work whose quantity cannot be known in advance, such as excavation or utility runs. Payment follows field-measured quantities rather than estimated ones, so accurate field measurement is what protects the contractor's revenue.

Question 23

What does a valid change order require?

Accepted Answer

A written modification signed by both parties covering all three of: the change in scope, the change in contract price, and the change in contract time. Proceeding on a verbal instruction is the most common way contractors lose payment for extra work, because the contract's own terms almost always require the change to be in writing.

Question 24

Liquidated damages vs a penalty clause

Accepted Answer

Liquidated damages are a pre-agreed daily amount that reasonably estimates the owner's actual loss from late completion, and courts enforce them. A sum set purely to punish lateness is a penalty and is unenforceable. The test is whether the figure was a genuine forecast of loss at the time the contract was signed, not what the loss turned out to be.

Question 25

What is retainage and why does it hurt?

Accepted Answer

A percentage of each progress payment the owner withholds until the work is accepted, held as security that the contractor will finish and correct defects. Its real effect is cash flow: the withheld money is revenue already earned and already spent on labor and materials, so retainage is financed out of the contractor's own working capital.

Question 26

Substantial completion vs final completion

Accepted Answer

Substantial completion is the point at which the owner can occupy and use the work for its intended purpose. It typically starts the warranty period, shifts risk of loss and insurance responsibility, stops liquidated damages from accruing, and triggers the punch list. Final completion comes after every punch list item is closed and releases the remaining retainage.

Question 27

What is the critical path on a CPM schedule?

Accepted Answer

The longest continuous chain of dependent activities through the project, and the one with zero float. Any delay to a critical activity pushes the completion date one day for one day. The practical consequence: to compress a schedule you must shorten critical activities - adding crews to a non-critical task gains nothing.

Question 28

What is float (slack)?

Accepted Answer

The amount of time an activity can slip without causing a delay. Total float is measured against the project completion date; free float is how long an activity can slip without delaying the very next activity. Critical path activities have zero float by definition, which is what makes them critical.

Question 29

In submittal and shop drawing review, what is the contractor actually approving?

Accepted Answer

The contractor reviews and stamps submittals for conformance with the contract documents before forwarding them; the designer then checks only for general conformance with the design intent. The consequence matters: the designer's approval does not relieve the contractor of responsibility for dimensions, quantities, fabrication methods, or field fit.

Question 30

What is a punch list?

Accepted Answer

The itemized list of incomplete or defective items identified at substantial completion. Closing every item is normally the condition for final completion, final payment, and release of retainage - so an open punch list directly withholds the contractor's last and most profitable money.

Question 31

Performance bond vs payment bond

Accepted Answer

A performance bond protects the owner: if the contractor defaults, the surety completes the work or pays the cost of completion. A payment bond protects subcontractors and suppliers by guaranteeing they get paid, which indirectly protects the owner's property from their liens. They are two separate bonds covering opposite parties.

Question 32

Builder's risk insurance vs commercial general liability

Accepted Answer

Builder's risk is first-party property coverage on the structure under construction and the materials for it, against losses such as fire, wind, and theft. CGL is third-party coverage for bodily injury and property damage the contractor's operations cause to others. Neither policy covers the other's loss, so a project needs both.

Question 33

How fast must a work-related fatality be reported to OSHA, versus a hospitalization?

Accepted Answer

A fatality must be reported within 8 hours. An in-patient hospitalization, an amputation, or the loss of an eye must be reported within 24 hours. These are direct reports to OSHA and are entirely separate from recording the case on the OSHA 300 log, which does not satisfy the reporting duty.

Question 34

When must the OSHA Form 300A summary be posted?

Accepted Answer

From February 1 through April 30 each year, in the place where employee notices are normally posted, covering the prior calendar year. A company executive must certify it. Note what is posted: the 300A annual summary goes up, while the detailed 300 log itself is not posted.

Question 35

At what height does OSHA require fall protection in construction?

Accepted Answer

Six feet above a lower level for most construction work, satisfied by guardrails, safety nets, or a personal fall arrest system. Watch the exceptions: scaffolds use a 10-foot trigger and steel erection has its own rule. The 4-foot general industry trigger does not apply on a construction site.

Question 36

At what depth does an excavation need a protective system?

Accepted Answer

Five feet, unless a competent person determines the excavation is entirely in stable rock. Sloping, benching, shoring, or shielding may be used. A competent person must inspect daily and remove workers when a hazard appears, and any excavation 20 feet or deeper requires a protective system designed by a registered professional engineer.

Question 37

How does the FLSA overtime rule apply to construction employees?

Accepted Answer

One and one-half times the regular rate for every hour worked over 40 in a single workweek. The workweek is a fixed, recurring 168-hour period, and hours cannot be averaged across two weeks to avoid overtime. The regular rate also includes non-discretionary bonuses and shift premiums, not just base hourly pay.

Question 38

What is the deadline for completing Form I-9 on a new hire?

Accepted Answer

The employee completes Section 1 no later than the first day of work for pay, and the employer completes its portion within 3 business days of hire. Retain the form for 3 years after the hire date or 1 year after employment ends, whichever is later. The I-9 is kept by the employer and is not filed with the government.

Question 39

When must a Virginia contractor carry workers' compensation insurance?

Accepted Answer

When the business regularly employs more than two employees - that is, three or more, part-time or full-time. A contractor must count its subcontractors' employees in that total. Under the statutory employer rule in Va. Code 65.2-302, a general contractor can also be liable for an uninsured subcontractor's injured worker.

Question 40

What is Virginia's legal presumption about independent contractor status?

Accepted Answer

Since January 1, 2021, anyone paid for services is presumed to be an employee unless the employer proves independent contractor status under IRS guidelines. Civil penalties reach $1,000 per misclassified worker for a first offense, $2,500 for a second, and $5,000 after that - and no signed agreement can convert an employee into a contractor.

Question 41

Working capital and the current ratio

Accepted Answer

Working capital is current assets minus current liabilities - the cash cushion available to run jobs. The current ratio is current assets divided by current liabilities. Sureties and lenders want to see it comfortably above 1.0; below 1.0 the company cannot cover the coming year's obligations from its short-term assets.

Question 42

Cash-basis vs accrual accounting for a contractor

Accepted Answer

Cash basis records income when money arrives and expenses when they are paid. It is simple but conceals money owed on work already performed. Accrual records revenue when earned and expenses when incurred, exposing receivables and payables. Sureties and lenders require accrual-based statements for exactly that reason.

Question 43

Overbilling vs underbilling under percentage-of-completion accounting

Accepted Answer

Overbilling means you have invoiced more than you have earned; it appears as a liability and amounts to borrowing cash from the job. Underbilling means you earned more than you billed; it appears as an asset and is the classic warning sign of unbilled change orders or a job quietly losing money.

Question 44

How do you calculate a contractor's break-even sales volume?

Accepted Answer

Divide annual overhead by the gross profit margin. With $200,000 of overhead and a 20 percent margin, break-even volume is $1,000,000 of revenue. Below that the company loses money no matter how carefully individual jobs were priced, which is why overhead recovery has to be built into the markup.

Question 45

Balance sheet vs income statement

Accepted Answer

The balance sheet is a snapshot at a single date where assets equal liabilities plus owner's equity. The income statement covers a period of time and shows revenue minus costs, ending in profit or loss. The distinction that sinks contractors: a company can report a profit and still fail, because profit is not cash.

Question 46

Form 941 vs Form 940

Accepted Answer

Form 941 is the quarterly payroll return reporting withheld income tax plus the employee and employer shares of Social Security and Medicare. Form 940 is the annual federal unemployment (FUTA) return. Both are returns only - actual deposits of withheld tax follow their own separate schedule and are not satisfied by filing these forms.

Question 47

What is the FUTA tax rate and wage base?

Accepted Answer

6.0 percent on the first $7,000 of each employee's annual wages. Employers who pay their state unemployment tax on time receive a credit of up to 5.4 percent, cutting the effective rate to 0.6 percent, or $42 per employee per year. FUTA is paid entirely by the employer; nothing is withheld from the worker.

Question 48

Who pays Virginia sales tax on materials a contractor installs?

Accepted Answer

The contractor does. Under Va. Code 58.1-610, a contractor working on real property is treated as the consumer of the materials, so it pays sales or use tax when purchasing them and does not charge sales tax to the customer. That tax is a job cost and belongs inside the estimate, not added to the invoice.

Question 49

Form W-2 vs Form 1099-NEC

Accepted Answer

A W-2 reports wages to an employee with income tax, Social Security, and Medicare withheld. A 1099-NEC reports $600 or more paid to an unincorporated independent contractor, with nothing withheld. Both are due to the recipient and the government by January 31, and pushing a true employee onto a 1099 carries penalties.

Question 50

What is the deadline to file a memorandum of mechanic's lien in Virginia?

Accepted Answer

No later than 90 days from the last day of the month in which labor or materials were last furnished, and in no event later than 90 days from completion or termination of the work. Do not confuse that with the separate 150-day rule, which limits any single memorandum to sums for labor and materials furnished within the 150 days before that last day. Suit to enforce must follow within 6 months of recording or 60 days from completion, whichever occurs last.

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