Free Virginia General Contractor Exam Flashcards

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.