1 Exam Prep Florida Contractors Manual 2013 Tabs and ... · 1 Exam Prep – Contractors Manual 2013 1 1 Exam Prep Florida Contractors Manual 2013 Tabs and Highlights These 1 Exam

1 Exam Prep – Contractors Manual 2013 1

1 Exam Prep

Florida Contractors Manual 2013

Tabs and Highlights

These 1 Exam Prep Tabs are based on the Florida Contractors Manual, 2013 Edition.

Each Tabs sheet has five rows of tabs. Start with the first tab at the first row at the top of the page; proceed

down that row placing the tabs at the locations listed below. Place each tab in your book setting it down one

notch until you get to the last tab (usually the index or glossary). Then start with the highlights.

1 Exam Prep Tab Section/Pg #.

Ch. 1 Table of Contents 1-3

Business Organizations 1-11

Financing 1-17

Licenses/Permits 1-20

Dissolution 1-29


Licensing Exemptions 2-6

Financial Responsibility 2-19

Grounds for Disciplinary 2-23

Action

F.S. 455 2-25

F.S. 489 2-59

Qualifying Agent 2-81

Recovery Fund 2-96

Board Rules 2-135


Balance Sheet 3-11



Income Statements 3-23

Journal 3-25

Manuel System 3-28

Depreciation MACRS 3-36

Open Invoice 3-46

Inventory 3-59

Part II Construction Accounting 3-69

Types of Capital 3-71

Job Cost Records 3-77

Types of Contracts 3-78

Revenue Recognition 3-79

Financial Ratios 3-89

Lease vs. Buy 3-93

Glossary 3-105

Davis-Bacon 3-113

Circular E 3-149

Ch. 4 Table Of Contents 4-3

Builder’s Risk 4-7

Contractual Liability 4-9

Premium Rates 4-12

Bonds vs. Insurance 4-13

Principle of Indemnity 4-16

Qualifying and Cost 4-17




Right-To-Work 5-14

FLSA Minimum Wage 5-15

Child Labor 5-30

Davis-Bacon Act 5-33

ADA 5-41

Worker’s Comp Law 5-54

IRCA 5-57

FLSA 5-61

Child Labor Law Handbook 5-169

Florida Unemployment 5-265

Comp Law


WC Needed and 6-5

Exemptions

Type of Coverages 6-9

Benefit Summary 6-10

F.S. 440: Workers’ 6-61

Compensation

Ch. 7 Tables of Contents 7-3

Employer Responsibility 7-6

Record Keeping 7-9

OSHA Forms 7-13

300A, 300, 301

Penalties Regulatory and Civil 7-31



Safety Programs 7-36

Excavation, Trenching, 7-41

and Shoring

Ropes and Rigging 7-49

Safety Factors 7-53

Splicing Rope 7-59

Wire Slings 7-67

Rigging Equipment and 7-75

Hardware

Ch. 8- Table Contents 8-3

Contract Definitions 8-5

Expressed Contact Terms 8-9

Order of Precedence 8-15

Ch. 558 - Notice of Claim 8-17

Dispute Resolution Steps 8-18

Ch. 9 - Table Of Contents 9-1

Claim of Lien 9-26

Final Affidavit 9-37

Civil Remedies 9-39

Bonds 9-43

F.S. 713 - Construction Liens 9-71

Ch. 10 - Table Of Contents 10-3

Plans and Specs 10-6



CSI Masterformat 10-7

General and Suppl. 10-11

Conditions

Estimating 10-11

Activity and Material 10-23

Estimates

Equipment Estimates 10-27

Labor Estimates (Man Hours) 10-28

Factors Affecting Production 10-30

Types of Contracts 10-34

Cost Accounting 10-37

Sub-Contractors 10-54

Change Orders 10-54

Network Analysis 10-57

Project Planning 10-58

Contract Administration 10-65

Cost Control 10-71

Job Responsibilities 10-71

Terms and Definitions 10-73

Metric Conversions 10-77

Environmental Compliance 10-91

This concludes the tabs for this document. Please continue with the highlights on the following page.


Section/Pg #. Highlight

1-5 Business Plan: "A good construction business plan should answer the following

questions: (9 bullets)" 1-6 Suggested Check List for Starting a Business: Note the 14 points for consideration. 1-7 Nature of your Business or Service: "Define exactly what business you are in‖.

(4 bullets) " Markets (3 bullets) Competition (3 bullets) Expense of Start-Up (7 bullets);

1-8 Projecting Income and Expenses (11 bullets)

Legal Types of Businesses (7 bullets) Employment (11 bullets) Taxes (7 bullets) Regulations (6 bullets) Financing (7bullets) Site Locations (4 bullets)

1-9 Leasing Arrangements (11 bullets)

Insurance Coverage (5 bullets) Record Keeping (5 bullets) Advertising & Marketing (7 bullets) Business Management

1-10 "The duties of an effective and responsible manager include: Planning, organizing, directing, controlling, standardizing, assigning and communicating."

Note and highlight each of these sections: Planning, Organizing, Directing, Controlling, Standardizing, Assigning, and Communicating.

1-11 Business Organizations: "A business may be defined as any private trade, occupation,

profession, operation, private institution whether it is conducted for profit or not. Florida law regulates an governs not only the establishment of business organization, but also controls the operations of those business entities. The types of business organization that you select depend partly upon: (8 bullets).

Select Type of Business Structure: "One of the most important decisions you will make is whether to set up the business as a (1) Sole Proprietorship, (2) Partnership, (3) Joint Venture or (4) Corporation." Sole Proprietorship: "A sole proprietorship is the simplest form of business organization. It only requires compliance with state and local business licensing requirements."


Section/Pg #. Highlight "The advantages of Sole Proprietorship are: (4 bullets)." "There are numerous disadvantages: (5 bullets)." Partnership: "The Florida Uniform Partnership Act defines a "partnership" as two or more persons associating themselves as co-owners for the purpose of carrying on a business for profit."

1-11 - 1-12 "A partnership agreement should include, and provide for, at least the following: (16

bullets)"

1-12 "There are two types of partnerships recognized in Florida, a general partnership and a limited partnership." General Partnership: "Each of the partners are fully and personally liable as co-owners of the business." Limited Partnership: "A limited partnership is an entity comprised of at least and which, in addition, has one or more limited partners." "A "limited partner" is a person or entity which invests capital in the partnership and receives a share of the partnership proceeds. A limited partner is immune from liability for

partnership debts beyond the amount of his investment. A limited partner cannot be involved in the management or day-to-day operations of the bushiness without risking the loss of their immunity from liability. Due to this restriction, the qualifying business cannot be a limited partner. A limited partner is, generally, a more passive investor. A limited partnership may have any number of limited partners but must always have at least one general partner." Advantages of a partnership: (5 bullets) Disadvantages of a partnership: (4 bullets). Joint Ventures: "A joint venture is a special combination of two or more persons or entities jointly seeking a profit in some specific venture, without an actual partnership or corporate designation." "A joint venture is generally thought of as a special partnership of a specific job or undertaking."

1-12 - 1-13 "The primary difference between a partnership and a joint venture is that a partnership is

usually created for the general transaction of business of a particular type, while the joint venture is usually limited to a single transaction. The advantages and disadvantages are substantially the same as those listed above for partnerships."

1-13 Corporation: "Corporations are creations of statutes, and can exist only to the extent and

in the form authorized by law. The corporate form of business is usually the most costly to organize." Advantages of Corporations (7 bullets) Disadvantages (5 bullets). "As mentioned above, a disadvantage of incorporation is the possibility of double taxation. The potential for double taxation of corporate earnings exists if earnings are distributed to stockholders as dividends."


Section/Pg #. Highlight S-Corporation: "Provisions allow shareholders to absorb all corporate income or losses as partners and report it as individual taxpayers. In essence, the S corporation is not affected by corporate income taxes, thereby eliminating the double taxation feature of standard corporations. The election of 'S Corporation' status is a tax matter as provided for by IRS regulations, and is not a matter effected by Florida Corporation Law." "A Corporation must meet certain requirements before the S corporation alternative becomes feasible. They are: (8 bullets)." Control of the Business: "Sole Proprietorship - You have absolute authority over all business decisions." "Partnership - Control of the business is shared with your partners, as provided for in the partnership agreement, which may lead to disputes."

1-14 "Joint Venture - Same as partnership." "Corporation (Standard or S) - Control depends on

stock ownership. In other words, 51% stock ownership or control means that you are able to make policy decisions. Control is exercised through regular board of directors' meetings and annual stockholders meetings." Guidelines to Organizing Your Business: State: Corporate Filing and Fees (Standard or S): Highlight the Florida Department of State address and website. County: Fictitious Name Registration: "If you intend to operate, promote and advertise your business to the public using a business name other than your own name or the name of your corporation or partnership as filed with the Secretary of State of the State of Florida, then you must comply with the Fictitious Name Act." "The Division of Corporations will not deny a registration for a duplicate name." "A person may engage in business under a fictitious name by registering the name with the Division of Corporations by filling out an "Application for Registration of Fictitious Name."

1-15 "Fictitious names are valid for 5 years and expire on December 31 of the fifth year.

(Highlight the Department of State address and telephone number.) "The non-refundable processing fees for fictitious names are as follows: (five fees.)"

1-15 - 1-16 Site Location: On-Site Considerations: A few of the factors that should be considered when selecting an office site are: (11 bullets)."

1-16 Information on Regulations and Requirements: "For permits involving a state highway

or an access road of an interstate highway, contact: (Dept. of Transportation address, phone number, and website)." With respect to waste water handling, pollution abatement systems, drinking water and ground water, contact: (Florida Department of Environmental Protection address, phone number, and website)." Solid and Hazardous Waste Laws and Regulations: "Obtain a copy of and comply with the regulations from: (Florida Department of Environmental Protection, address, phone number, and website)." Permit to Discharge into Navigable Waters: "Any dredged, excavated, or fill materials (includes wet lands and storm water management)."


Section/Pg #. Highlight Permit for Construction: "Construction of any structure in or across any navigable waters of the U.S., or any road, pipeline, convey or system, or any other structure over, on, or adjacent to a leave or similar federally-maintained structure." (Highlight U.S. Army Corps of Engineers Jacksonville District addresss and phone number.)

1-17 Selecting the Type of Financing: "Need for capital in starting and operating a business

usually occurs in three stages: (1) to cover startup costs, (2) to finance current operations (working capital), and (3) to expand the established business." Starting Capital: "A contractor may obtain the initial (start-up) capital in many ways, such as: (7 bullets)." "As a rule of thumb, starting capital should be enough to cover living expenses for three months to a year depending on the type of business. Some of the expenses to take into consideration are: (13 bullets). Working Capital: "Many of the same sources used in start-up financing can be used to gain additional working capital as well. In addition to the previous sources, a contractor may: (6 bullets)."

1-18 Expansion: "Expanding a business usually requires a great deal of capital. To qualify for

some programs, being in business at least two to five years is preferred. In addition to the sources listed under start-up and working capital, a contractor may: (5 bullets)."

1-18-1-20 Outline of a Model Business Plan: Highlight Items 1 through 9. 1-20 Qualifying Agents: "However, if a partnership, joint venture, corporation or any other

form of business entity proposes to engage in contracting, it must apply to the Florida Department of Professional Regulation, through a qualifying agent." Obtain Required Licenses and Permits: Federal: SS-4 Application for Employer Identification Number: "Unless you are a sole proprietor, this registration is required even though you may not have employees. The form must be filed on or before the seventh day after the date on which business begins." (Highlight the IRS address, phone number, and website.)

1-21 State: DR-1 Application for Certificate of Registration (Sales Tax Number): "All

businesses which collect the sales tax must secure a Certificate of Registration (sales tax number) from the department of revenue." (Highlight the DOR address, phone number, and website.) Occupational Licenses: "Occupational licenses are required for every business and are issued by counties and cities." Certificate of Occupancy: "After a business location has been selected, a certificate of occupancy must be obtained." Zoning Permits (Certificate of Use): "Check with your county planning department or building inspection division to determine which forms are needed for your business location."

1-22 State Licensing Agencies: Department of Professional Regulation: "The main

Website for Department of Professional Regulation: www.myfloridalicense.com/dbpr ." (Highlight the address and phone number for Construction and Electrical.)

1-23 Required Forms: Form 940 Employer's Annual Unemployment Tax Return: "Used

to report and pay on an annual basis, the federal unemployment compensation tax. If you have no employees this form is not needed."



1-23 Form 941 Employer's Quarterly Tax Return: "Used to report, on a quarterly basis, the income tax, social security and Medicare taxes withheld from employees' wages and the social security and Medicare taxes matched by the employer."

(State) UCS-1 Report to Determine Status (State) UCT-6S Unemployment Compensation Tax Return: "Used to report and pay quarterly employer's unemployment compensation tax based on employees' wages." " ... not to be confused with workers' compensation insurance." Workers' Compensation; DR-15-CS Sales and Use Tax Report

1-24 DR-601-AC Intangible Personal Property Tax Return: (Corporations and

Partnerships) DR-601-AI Intangible Personal Property Tax Return: (Individual and Fiduciary); Corporate Income Tax: "This form is to be filed if your business is a corporation or if you are planning to incorporate." DR-405 Tangible Personal Property Tax Report: "Used to report tangible personal property (equipment, furniture, etc) and inventory on a yearly basis." Sources of Information and Assistance: The Florida Department of Commerce Division of Economic Development; The Florida Department of Commerce

1-25 Small and Minority Business Advisory Council: (Highlight the address and phone number.) Minority Business Development Centers: "They offer existing and potential minority entrepreneurs a wide range of services, from initial counseling on how to start a business to more complex issues of planning and growth." (Highlight the address and phone number.) Florida Small Business Development Centers.

1-26 Small Business Administration: "The U.S. Small Business Administration (SBA) issues

several types of management, technical, and marketing publications to assist established or prospective businesses. A few of the topics include accounting, financial management, personnel management, purchasing, advertising, market research competitive strategy, and business plan development." (Highlight the Miami address and phone number.)

1-27 SCORE — Service Corps of Retired Executives

Other Sources of Information Labor Regulations; Proof of Age - if employment of Minors is anticipated; Occupational Safety and Health Act (OSHA) (Highlight the address, phone number, and website of each.)

1-28 Workers' Compensation Insurance, Employee Training (Highlight address, phone number, and website.)

1-29 Partnership Dissolution or Termination: "When a partnership comes to an end, there

are basically three steps which it goes through: (1) Dissolution, (2) Winding up, and, (3) Termination." "The dissolution of a partnership is the change in the relation of the partners caused by a partner ceasing to be associated in the carrying on of the business.


Section/Pg #. Highlight Dissolution is not to be confused with termination; on dissolution the partnership is not terminated, but continues until all of the partnership affairs are completed through a process referred to as 'winding up.'" "Termination is the point in time when all the partnership affairs are wound up, and winding up or liquidation is the actual process of selling the assets, paying the liabilities, and distributing the excess to the partners after dissolution." "A partnership is also dissolved by: (1. - 4.)"

1-30 Corporate Dissolution and Liquidation: "Two types should be distinguished: (1. - 2.)"

"Florida law prescribes three procedures for the voluntary dissolution of a corporation: (1. - 3.)" "Generally, no gain or loss is realized by a corporation on distribution of its assets and complete liquidation. However, there are exceptions to this general rule. The most important exceptions are: (1. - 2.)" "Because of the somewhat complex nature of the tax consequences to a corporation and its shareholders, the dissolution and liquidation of a corporate business organization should be pursued with extreme caution and with professional advice and assistance."

2-5 Regulation of Contractors in Florida: Chapter 489, Florida Statutes: "Florida Statutes

(Chapter 489), provide for the licensure and regulation of all types of contractors in Florida and are divided into three parts: (1) Construction contracting; (2) Electrical and alarm system contracting; and (3) Septic tank contracting." "The Construction Industry Licensing Board in turn is divided into two divisions. Division I has jurisdiction over the examination and regulation of general contractors, building contractors, and residential contractors. Division II has jurisdiction over the examination and regulation of roofing contractors, sheet metal contractors, air conditioning contractors, mechanical contractors, pool contractors, plumbing contractors, underground utility and excavation contractors, solar contractors, and pollutant storage system contractors."

2-6 "Part II of Chapter 489 provides for an eleven-member Electrical Contractors' Licensing

Board responsible for the licensure and regulation of electrical and alarm system contractors." "Part III of Chapter 489 provides for the licensure of septic tank contractors by the Department of Health and Rehabilitated Services (HRS)."

2-6 Construction Contracting: "Generally, any person who, for compensation, undertakes

to, submits a bid to, or does himself or by others construct, repair, alter, remodel, add to, demolish, subtract from, or improve any building or structure including related improvements to real estate, for others or for resale to others, must be licensed."

2-6 – 2-7 Licensing Exemptions - Construction Contracting: "The following are exempt from

state licensure: (1. - 22.)" Most important are: (1), (4), (7), (8), (11), (14), (15), (18), and (19).

2-7 – 2-8 Subcontracting Requirements: "A contractor shall subcontract all electrical, mechanical, plumbing, roofing, sheet metal, swimming pool and air-conditioning work, unless such contractor holds a state certificate or registration in the respective trade category, however the following exceptions are recognized: (Highlight items (1) - (5)."

2-8 Subcontractors - Independent Contractors or Employees?: "Unfortunately,

employers often operate under the mistaken presumption that an independent contractor relationship is created by agreement of the parties. In fact, IRS and Department of Labor auditors will give very little credence to the classification designated in a contract."


Section/Pg #. Highlight "An auditor will deem the individual an employee and the auditing agency will impose substantial financial hardship in the form of back taxes, Social Security, unemployment and workers compensation." "Consequently, an employee who signed a contract agreeing that he or she is an independent contractor may still bring an action for unpaid wages and overtime." "Generally a worker is an independent contractor if the person or entity for whom the services are performed has the right to control or direct only the result of the work, and not the means and methods of accomplishing the result. For FICA purposes, an individual is an employee if, under the common law rules applicable in determining the employer-employee relationship, the individual has the status of employee. The general rule for determining whether an individual has the "status of employee" is that an employment relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result, but also with respect to the details and means by which the result is accomplished. " ... it is enough to show the right to control."

2-9 New IRS Common Law Test: "The IRS has recently attempted to simplify and refine the common law independent contractor test. It has consolidated the twenty factors by organizing them into three main groups with eleven tests. Facts that provide evidence of the degree of control and independence fall into three categories: (Highlight the 3 bullets: Behavioral, Financial, and Type of Relationship.) Behavioral Control: "A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done as long as the employer has the right to direct and con troll the work. The behavioral control factors fall into the categories of: (4 bullets). Types of instructions given include: (6 bullets). "As a starting point in its analysis, an auditing agency may look to where the work is performed." "If a contract requires an individual to work at the employer's place of business, an employment relationship may be inferred unless other factors clearly indicate otherwise. If a true independent contractor relationship is desired, a contract should not require a worker's presence, unless entirely unavoidable due to the circumstances of the work performed. Phrases such as "on-site" or "in-house" should be avoided." "Set hours of work will also indicate control and the existence of an employment relationship. A true independent contractor will typically not be bound by specific hours. If a contract indicates that a worker is to be "available" during the employer's hours of operation, this will indicate control sufficient to suggest an employment relationship."

2-10 "If the worker hires, supervises and pays his or her own assistants, or provides supplies

and equipment necessary to complete the work, these are factors that will suggest an independent contractor status." "Degree of instruction: The more detailed the instructions provided to a worker, the more control the employer exercises over the worker." "Evaluation system: If an evaluation system measures the details of how the work is performed, then these factors would point to an employee." "Training: Employer-provided training on how to do a specific job indicates that the employer wants the task completed in a particular way and is strong evidence that the worker is an employee."


Section/Pg #. Highlight Financial Control: "These factors fall into the following categories: (5 bullets)." "Significant investment: An independent contractor often has a significant investment in the equipment or facilities he or she uses in working for someone else." "Unreimbursed expenses: Independent contractors are more likely to have unreimbursed expenses than are employees." "Opportunity for profit or loss: The opportunity to make a profit or loss is another important factor."

2-10 - 2-11 "Services available to the market:" "Employers should also avoid contract language that

suggests that the employer is the contractor's "primary" client or it is to receive "priority" over other clients."

2-11 "Method of payment:" "An independent contractor is usually paid a specified fee for the

job." Type of Relationship: "Type of relationship refers to facts that show how the two parties perceive their relationship to each other. These factors generally fall into the following four categories: (4 bullets)." "Written contract: Although a contract may state that the worker is an employee or an independent contractor, this is not sufficient to determine the worker's status." Employee benefits: "Businesses generally do not grant these benefits to independent contractors. However, the lack of these types of benefits does not necessarily mean the worker is an independent contractor." "Permanency of the relationship: A continuing relationship between a worker and the person for whom services are performed is generally considered evidence that the intent was to create an employer-employee relationship. If the employer has the right to discharge a worker, an employment relationship is indicated. However, an independent contractor generally cannot be terminated so long as the contract specifications are being met." "Services provided as a key activity of the business: If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities." "Safe Harbor Exemption for Certain Companies Treating Workers as Independent Contractors Since 1977 or Earlier." "This exemption, which is sort of a "grandfather clause," is available only if all the following conditions are met: (3 bullets)"

2-12 "Ways to avoid having independent contractors treated as employees: (13 bullets)" 2-13 Penalties for Unlicensed Activity: "Any person who falsely holds himself out to be a

licensed contractor or who engages in contracting without first obtaining a license is guilty of a first degree misdemeanor, and a second offense is a third degree felony."

2-14 "In addition, in any action against a contractor for injuries sustained resulting from the

contractor's negligence, malfeasance, or misfeasance, the consumer is entitled to three times the actual damages sustained and costs and attorney's fees if the contractor is neither certified by the state nor licensed pursuant to the laws of the city or county in which he does business."


Section/Pg #. Highlight Licensing Requirements: "A "Certified contractor" is any contractor who successfully passes a state-administered examination and obtains a certificate of competency issued by the DBPR." A "Registered contractor" is any contractor who has registered with the DBPR and has fulfilled the competency requirements in the city, county or district for which the registration is issued."

2-15 – 2-16 Certification: Certified Construction Contractors: "To obtain licensure as a certified construction contractor, an applicant must submit a more detailed application and pass an examination administered by DBPR. Licensure as a certified contractor entitles the licensee to engage in contracting throughout the state, with the scope of his license." "To be eligible to take an examination for certification, an applicant must:" (Highlight all of the requirements listed in items (1) through (3).

2-17 Medical Gas Certification: "Any person who is employed by a licensed plumbing

contractor to install, improve, repair or maintain a medical gas system must take a course of at least eight hours of both classroom and practical work designed to teach familiarity in performing and inspecting brazing duties required of medical gas installation, improvement, repair or maintenance work."

2-19 Public Liability Insurance: "As a prerequisite to initial licensure or the renewal of a

license as a certified or registered contractor, all applicants must submit a signed affidavit attesting to the fact that they have obtained and will maintain public liability and property damage insurance in the minimum amounts of $300,000 (liability)/$50,000 (property damage) for general and building contractors, and $100,000 (liability)/$25,000 (property damage) for all other contracting categories under Part I of Chapter 489." Evidence of Workers Compensation Coverage. Term of License: "Licensure as a certified or registered contractor must be renewed every two years."

2-19 – 2-20 Continuing Education: "Each certified or registered contractor must complete at least 14 classroom or interactive distance learning hours of continuing education every two years." "Of the required fourteen hours, one hour is required in each of the following topics: (6 bullets)."

2-20 Business Records: "Contractors licensed pursuant to Chapter 489, Florida Statute,

must maintain complete financial and business records kept in the regular course of business for the immediately preceding three years." Business Licenses - Qualification of Business Organizations: General Requirements: "The application must also show that the qualifying agent is legally qualified to act for the business organization in all maters connected with its contracting business, ..." "A joint venture must be qualified as a separate and distinct business entity." The qualifying agent must be licensed as a certified or registered contractor in order for the business organization to be certified or registered in the category in which the qualifying agent is licensed."

2-21 Professional Responsibility - Liability: "In a business entity with one qualifying agent,

the qualifying agent is responsible for supervision of all operations of the business, for all field work at all sites, and, unless a financially responsible officer is designated (see below), for financial matters of the organization and for each specific job."


Section/Pg #. Highlight "A secondary qualifying agent is responsible only for supervision of field work at sites where his license was used to obtain the building permit, and any other work for which he accepts responsibility. A secondary qualifying agent is not responsible for supervision of financial matters." "A business entity may designate a financially responsible officer (FRO) for purposes of certification or registration, subject to approval by the licensing board. A financially responsible officer assumes personal responsibility for all financial aspects of the business, and may not be designated as the primary qualifying agent. Where a business entity has designated a financially responsible officer, the primary qualifying agent is responsible for all construction activities of the business, both in general and for each job."

2-22 Changes in Licensure Information: "A business organization must inform the

Department of Business and Professional Regulation by mail of any change in information required to be submitted on the application for qualification of the business organization within forty-five days following the change." License Number Must Appear on Building Permits and Advertisements: "A licensed contractor must place his registration or certification number on each building permit issued to him. In addition, a contractor's license number must appear in any advertisement concerning the contractor, including text or artwork on the contractor's vehicle."

2-23 – 2-24 Grounds for Disciplinary Action Against Contractors: Highlight items (1) through (17), with special attention to items (7)(b) and (8).

2-27 455.01 Definitions: Highlight items (1) through (6).

455.02 Licensure of members of the Armed Forces: Highlight items (1) and (2). 2-28 455.10 Restriction on requirement of citizenship.

2-29 – 2-30 455.203 Department; powers and duties. Highlight items (1) through (10)

2-30 – 2-31 455.207 Boards; organization; meetings; compensation and travel expenses.

Highlight items (1) through (5). 2-31 455.209 Accountability and liability of board members. "(1) Each board member shall

be accountable to the Governor for the proper performance of duties as a member of the board." "(2) Each board member and each former board member serving on a probable cause panel shall be exempt from civil liability for any act or omission when acting in the member's official capacity, ...„

2-32 455.212 Education; substituting, demonstration of competency for clock-hour requirements: "Any board, or the department when there is not board, that requires student completion of a specific number of clock hours of classroom instruction for initial licensure purposes shall establish the minimal competencies that such students must demonstrate in order to be licensed."

2-33 455.213 General licensing provisions: "(1) Any person desiring to be licensed shall

apply to the department in writing." "(2) Before the issuance of any license, the department may charge an initial license fee as determined by rule of the applicable board or, if no such board exists, by rule of the department."


Section/Pg #. Highlight "(3) The board, or the department when there is no board, may refuse to issue an initial license to any applicant who is under investigation or prosecution in any jurisdiction for an action that would constitute a violation of this chapter ..."

2-34 "(6) Any board that currently requires continuing education for renewal of a license shall

adopt rules to establish the criteria for continuing education courses. The rules may provide that up to a maximum of 25 percent of the required continuing education hours can be fulfilled by the performance of pro bono services to the indigent or to underserved populations or in areas of critical need within the state where the licensee practices." "(7) Notwithstanding anything to the contrary, any elected official who is licensed pursuant to any practice act within the purview of this chapter may hold employment for compensation with any public agency concurrent with such public service. Such dual service shall be disclosed according to any disclosure required by applicable law."

2-35 455.217 Examinations: Highlight item (1).

2-37 455.2177 Monitoring of compliance with continuing education requirements:

Highlight item (1). 455.2178 Continuing Education Providers: Highlight item (1). 2-39 455.2185 Exemption for out of state professionals: Highlight item (1)(c).

455.219 Fees; receipts; disposition; periodic management reports: "... the department may adopt rules to implement a waiver of license renewal fees for that profession for a period not to exceed 2 years, as determined by the department. Each board, or the department when there is no board, shall ensure license fees are adequate to cover all anticipated costs and to maintain a reasonable cash balance ..."

2-40 455.221 Legal and investigative services: Highlight item (1). 2-41 455.2235 Mediation: Highlight item (1). 2-42 455.224 Authority to issue citations: "(1) Notwithstanding s. 455.225, the board or the

department shall adopt rules to permit the issuance of citations." Highlight (3) and (4). 2-42 455.225 Disciplinary proceedings: "(1)(a) The department, for the boards under its

jurisdiction, shall cause to be investigated any complaint that is filed before it if the complaint is in writing, signed by the complainant, and legally sufficient."

2-43 "(b) When an investigation of any subject is undertaken, the department shall promptly

furnish to the subject or the subject's attorney a copy of the complaint or document that resulted in the initiation of the investigation." "(2) The department shall allocate sufficient and adequately trained staff to expeditiously and thoroughly determine legal sufficiency and investigate all legally sufficient complaints." "(3)(a) As an alternative to the provisions of subsections (1) and (2), when a complaint is received, the department may provide a licensee with a notice of noncompliance for an initial offense of a minor violation." "Failure of a licensee to take action in correcting the violation within 15 days after notice may result in the institution of regular disciplinary proceedings."

2-45 - 2-46 455.227 Grounds for discipline; penalties; enforcement. Highlight items (1)(a) - (u)

and (2)(a) - (g).



2-47 455.2275 Penalty for giving false information. "... to practice a profession by

knowingly misleading statements or knowing misrepresentations constitutes a felony of the third degree ..." 455.228 Unlicensed practice of a profession; cease and desist notice; civil penalty; enforcement; citations; allocation of moneys collected. "(1) In addition to the foregoing remedies, the department may impose an administrative penalty not to exceed $5,000 per incident pursuant to the provisions of chapter 120 ..."

2-48 "(2) In addition to or in lieu of any remedy provided in subsection (1), the department may

seek the imposition of a civil penalty through the circuit court for any violation which the department may issue a notice to cease and desist under subsection (1). The civil penalty shall be no less than $500 and no more than $5,000 for each offense." 455.2281 Unlicensed activities; fees; disposition. "Therefore, the department shall impose, upon initial licensure and each renewal thereof, a special fee of $5 per licensee."

2-49 455.229 Public inspection of information required from applicants; exceptions;

examination hearing. Highlight item (1). 2-50 455.243 Authority to inspect. "Duly authorized agents and employees of the

department shall have the power to inspect in a lawful manner at all reasonable hours any establishment at which the services of a licensee authorized to prescribe controlled substances are offered."

2-50 - 2-51 455.271 Inactive and delinquent status. Highlight items (1) through (12). 2-52 455.275 Address of record. "(1) Each licensee of the department is solely responsible

for notifying the department in writing of the licensee's current mailing address and place of practice, as defined by rule of the board or the department when there is no board." 455.32 Management Privatization Act. Highlight items (1), (2), and (3)(a) - (g).

2-59 - 2-61 489.103 Exemptions. Highlight items (1) through (7). 2-62 Highlight item (9)(a). 2-63 Highlight item (15). 2-64 - 2-68 489.105 Definitions. Highlight the terms in (1) through (11). (For example, highlight

"Board" in item (1).

2-69 489.107 Construction Industry Licensing Board. Highlight items (1) through (3).

2-70 489.109 Fees. "(f) The board, by rule, shall impose an additional late fee on a delinquent status certificate holder or registrant when such certificate holder or registrant applies for active or inactive status."

2-71 489.111 Licensure by examination. "5.c. An active certified air-conditioning Class B

contractor is eligible to take the air-conditioning Class A contractor's examination if he or she possesses a minimum of 1 year of proven experience in the classification in which he or she is certified."

2-72 489.113 Qualifications for practice; restrictions. "(1) Any person who desires to

engage in contracting on a statewide basis shall, as a prerequisite thereto, establish his or her competency and qualifications to be certified pursuant to this part."


Section/Pg #. Highlight "(2) A person must be certified or registered in order to engage in the business of contracting in the state."

2-73 Highlight items (g) and (4)(a).

2-76 - 2-77 489.115 Certification and registration; endorsement; reciprocity; renewals;

continuing education. Highlight items (1), (4)(a), and (4)(b)1.

2-77 Highlight item (5)(c). 2-78 489.116 Inactive and delinquent status; renewal and cancellation notices. "(4)

Failure of a certificate holder or registrant to so apply shall cause the certificate of registration to become a delinquent certificate or registration."

2-81 489.119 Business organizations; qualifying agents. "(2)(b)1. An application for

registration or certification to qualify a business organization must include an affidavit on a form provided by the board attesting that the applicant has final approval authority for all construction work performed by the business organization and that the applicant has final approval authority on all business matters, including contracts, specifications, checks, drafts, or payments, regardless of the form of payment, made by the business organization, except where a financially responsible officer is approved." Highlight items (2)(b)2. and (2)(b)3. "(3)(a) In addition, if the qualifying agent is the only certified or registered contractor affiliated with the business organization, the business organization shall notify the department of the termination of the qualifying agent and shall have 60 days from the termination of the qualifying agent's affiliation with the business organization in which to employ another qualifying agent." "This temporary certificate or registration shall only allow the business organization to proceed with incomplete contracts."

2-82 Highlight item (6).

489.1195 Responsibilities. "(1) A qualifying agent is a primary qualifying agent unless he or she is a secondary qualifying agent under this section."

2-83 (1) "(b) Upon approval by the board, a business entity may designate a financially

responsible officer for purposes of certification or registration. A financially responsible officer shall be responsible for all financial aspects of the business organization and may not be designated as the primary qualifying agent." Highlight items (2)(e) through (3)(c). 489.121 Emergency registration upon death of contractor. "If an incomplete contract exists at the time of death of a contractor, the contract may be completed by any person even though not certified or registered. Such person shall notify the board, within 30 days after the death of the contractor, of his or her name and address, knowledge of the contract, and ability to complete it. If the board approves, he or she may proceed with the contract."

2-84 489.124 Business records requirements; address of record; service. "(1) All contractors who are registered or certified pursuant to this chapter shall maintain complete financial and business records for the immediately preceding 3 years." 489.126 Moneys received by contractors. Highlight Items (2) through (3)(b)3.


Section/Pg #. Highlight 2-88 489.128 Contracts entered into by unlicensed contractors unenforceable. "(1) As a

matter of public policy, contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor."

2-89 489.129 Disciplinary proceedings. "... impose an administrative fine not to exceed $10,000 per violation ..." "(g) ... Financial mismanagement or misconduct occurs when: 1. Valid liens have been recorded against the property of a contractor's customer for supplies or services ordered by the contractor for the customer's job; and the contractor has not had the liens removed from the property, by payment or by bond, within 75 days after the date of such liens;" "(j) Abandoning a construction project in which the contractor is engaged or under contract as a contractor. A project may be presumed abandoned after 90 days if the contractor terminates the project without just cause or without proper notification to the owner ...

2-90 (2) ... an additional administrative fine not to exceed $5,000 per violation against the

business organization or against any partner, officer, director, trustee, or member if such person participated in the violation or knew or should have known of the violation and failed to take reasonable corrective action."

2-91 Highlight item (11)(b)

489.13 Unlicensed contracting; notice of noncompliance; fine; authority to issue or receive a building permit; web page. Highlight item (1). "(3) Notwithstanding s. 455.228, the department may impose an administrative fine of up to $10,000 on any unlicensed person guilty of unlicensed contracting."

2-92 489.131 Applicability. "(3)(e) To require one bond for each contractor in an amount not to exceed $5,000, which bond shall be conditioned only upon compliance with the Florida Building Code adopted pursuant to s. 553.73."

2-93 "(1) ... or to issue permits with specific conditions to a contractor who, within the previous

12 months, has had disciplinary action other than a citation or letter of guidance taken against him or her by the department or by a local board or agency."

2-96 489.140 Florida Homeowners' Construction Recovery Fund.

489.1401 Legislative intent. "(2) ... on the homeowner's residence." 2-97 "(3) It is the intent of the Legislature that Division I contractors set apart funds for the

specific objective of participating in the fund." 489.141 Conditions for Recovery "(1)(a) The claimant has received final judgment in a court of competent jurisdiction in this state ..." "(1)(a)1. The claimant is unable to secure a final judgment against the licensee due to the death of the licensee; or 2. The claimant has sought to have assets involving the transaction that gave rise to the claim removed from the bankruptcy proceedings ..."

2-98 (1) "(c) The violation was committed by a licensee."



(1) "(d) The judgment, award, or restitution order specifies the actual damages suffered as a consequence of such violation. (1) "(f) A claim for recovery is made within 1 year after the conclusion of any civil, criminal, or administrative action or award in arbitration based on the act."

2-99 489.1425 Duty of contractor to notify residential property owner of recovery fund —

Highlight language of the Recovery fund. Highlight items (2)(a) - (2)(b). 489.143 Payment from the fund. "(2) Any claimant who meets all of the conditions prescribed in s. 489.141 may apply to the board to cause payment to be made to a claimant from the recovery fund in an amount equal to the judgment, award, or restitution order or $25,000. whichever is less, or an amount equal to the unsatisfied portion of such person's judgment, award, or restitution order"

2-100 "(4) Payments for claims arising out of the same transaction shall be limited, in the

aggregate, to the lesser of the judgment, award, or restitution order or the maximum payment allowed, regardless of the number of claimants involved in the transaction." "(5) Payments for claims against any one licensee shall not exceed, in the aggregate, $100,000 annually, up to a total aggregate of $250,000." 489.145 Guaranteed energy, water, and wastewater performance savings contracting. (1) SHORT TITLE and (2) LEGISLATIVE FINDINGS.

2-102 (5) CONTRACT PROVISIONS, (5)(a).

2-103 (5) "(g) "... however, the term of any contract expires at the end of each fiscal year and may be automatically renewed annually for up to 20 years ..." "(h) The guaranteed energy, water, and wastewater performance savings contract must stipulate that it does not constitute a dept, liability, or obligation of the state."

2-136 CHAPTER 61G4-12: ORGANIZATION AND PURPOSE 2-139 61G4-12.011 Definitions. 2-140 "(3) The terms "advertise" and "advertises" shall apply to ..." Highlight entire paragraph. 2-143 61G4-15: CERTIFICATION AND REGISTRATION 2-144 - 2-145 61G4-15.001 Qualification for Certification. "If the applicant's category is: The following

licensees can verify the applicant's active experiences:" Highlight table. 2-147 61G4-15.0021 Business Organizations. Highlight items (3)(b) through (3)(b)4.

"In addition, the financially responsible officer shall comply with the requirements of Rule 61G4-15.006, F.A.C., except that the financially responsible officer shall also demonstrate a personal or business organization net worth of at least $10,000 regardless of the category of contractor's license held by any other qualifier for the business organization, $10,000 cash and a bond in form acceptable to the Board's Executive Director made payable to the Board, for fines and costs, in the amount of $100,000."


Section/Pg #. Highlight 2-148 "(6) Qualification of a business organization is only effective as to that business

organization; subsidiaries or parents of qualified business organizations must be separately qualified."

2-149 61G4-15.003 Public Liability Insurance.

2-150 "(H) Proper aggregate amount of public liability and property damage as defined below:" Highlight the table.

2-151 61G4-15.006 Financial Responsibility and Financial Stability, Grounds for Denial.

Highlight items (1) and (2). 2-152 Highlight items (2)(a) through (4). 61G4-15.007 Notification of changes. Highlight items (1) through (3). 61G4-15.009 Replacement of Qualifying Persons. Highlight items (1) through (2)(c).

2-163 CHAPTER 61G4-16: EXAMINATIONS 2-163 - 2-171 61G4-16.001 Written Certification Examination Requirements. (Familiarize yourself

with the requirements to pass the exam in each of the different license categories.) 2-179 61G4-16.005 Duration of Validity. "For the purpose of certification, a passing grade

shall be valid only for a period of four (4) years from the date the list of successful candidates is approved by the Board."

2-181 CHAPER 61G4-17: DISCIPLINARY GUIDELINES 2-181 - 2-187 61G4-17.001 Normal Penalty Ranges. Highlight the table containing all of the penalties

for the different infractions of the law.

2-187 - 2-188 61G4-17.002 Aggravating and Mitigating Circumstances. "Circumstances which may be considered for the purposes of mitigation or aggravation of penalty shall include, but are not limited to, the following: (1) - (10)."

2-190 CHAPTER 61G4-18: CONTINUING EDUCATION: 61G4-18.001 Continuing Education

Requirements for Certificate holders and Registrants. "(1) Of the required 14 hours of continuing education, up to four (4) hours of credit may be earned by attending a meeting of the Board wherein disciplinary cases are considered." "(2) All registered contractors and certified contractors are required to complete fourteen (14) hours of continuing education each renewal cycle. Of the fourteen (14) hours, one (1) hour shall be required in each of the following topics: (a) - (f)."

2-191 - 2-192 "(9) A person is not required to complete any continuing education requirements for the

year in which a certificate or a registration is initially issued. Any person who obtains a certificate or a registration more than 12 months prior to the end of a biennial period is required to complete seven hours of approved continuing education as a condition of the first renewal of the certificate of registration."

2-192 61G4-18.002 Definitions. "(3) 'Classroom Hour' means fifty minutes of instruction,

exclusive of any breaks, recesses, or other time not spent in instruction." 2-196 61G4-18.009 Certifications of Completion. "(1)(a) It is the certificate holder's or

registrant's responsibility to maintain proof of completion of continuing education courses for three years."


Section/Pg #. Highlight 2-198 CHAPTER 61G4-19: CITATION AUTHORITY 2-198 – 2-199 61G4-19.001 Citations. Highlight items (1) through (15). 2-203 CHAPTER 61G4-21: CONSTRUCTION INDUSTRIES RECOVERY FUND

61G4-21.003 Filing Claims. "(5) A claim for recover must be made within 1 year after the conclusion of any civil, criminal, administrative action, or award in arbitration based on the act. If claimant is prevented from obtaining a judgment, board restitution order, or arbitration award, due to contractor's death, a claim for recovery must be filed within one year of the contractor's death. This paragraph applies to any claim not already filed with the board on July 1, 2004."

3-10 Bookkeeping versus Accounting: "Bookkeeping is the recording of business and

financial data in a prescribed manner." "Accounting is primarily concerned with the design of the system of records, the preparation of reports based on the recorded data, and the review and interpretation of the reports."

3-11 Assets, Liabilities and Equity: "Things owned by the company are called assets.

Claims by others are called liabilities." 3-12 "What is left over is the owner's equity in the company." "Assets = Liabilities + Equity."

"Changes in Assets, Liabilities and Equity: "Since assets equal liabilities plus equity, we know that if assets increase, then liabilities plus equity must increase by the same amount."

3-13 Changes in Equity: "There are two ways for equity to change. They are investments or

withdrawals by the owner, and earnings or losses by the company." Changes Caused by Withdrawals: "When a proprietor takes money out of his business, it is called a withdrawal. The Cash in Bank category goes down by $2,000 (to $33,000) and the equity category goes down $2,000 (to $48,000) as shown in Table 3-9."

3-14 Changes Caused by Earnings: "This increase in equity was earned by the company,

not invested by the owner, so we show it as a separate category called Earnings ..." 3-15 Revenues and Expenses: "Revenues are the money a company is paid, or expects to

be paid, for goods or services it provides to its customers." "Expenses are the amount a company spends to provide goods or services to its customers." "Earnings are what is left over after expenses are deducted from revenues."

3-16 When to Record Revenues and Expenses: "Revenue is recorded in the financial

records at the time the title or ownership of the goods or services passes to the customer. For a company that provides services, this usually means when the services or the contract for the services are completed." "The amount receivable from a customer for goods and services is an asset (it is actually a promise to pay in cash) called an account receivable."


Section/Pg #. Highlight "Expenses are recorded in the financial records either at the time they are incurred (for example, advertising), or if they can be matched to a certain good or service provided (for example, wages for a particular contract). The matching of expenses with the revenues that they helped generate is called the matching concept."

3-17 "This method of accounting for revenue and expenses when they are earned or incurred,

rather than when the cash is actually received or paid, is called the accrual method. It is one of the main principles of accounting."

3-20 Debits and Credits: "Debit refers to the left side of an account and credit refers to the

right side of an account." "In the practice of accounting, these two words refer only to the left (debit) and right (credit) sides of an account." "Asset accounts are on the left side of the balance sheet and therefore have debit balances. Liability and equity accounts are on the right side of a balance sheet and therefore have credit balances."

3-20 A Separate Income Statement: Why and How: "A statement which shows the earnings

earned over any particular period of time is called an income statement." "Income is also called net income, profit and net profit."

3-25 The Journal: "This being the case, he sets up a book in which to list by date all the

transactions he has recorded in his financial statements. Such a book is called a journal or general journal." "Then he can determine the amount of the debits and credits, which accounts got debited and credited, and a short description of the transaction being recorded, which might reference an invoice number or another document related to the transaction (this is sometimes called a source document)." "Such an entry is called a journal entry."

3-28 The Ledger: Why and How: "He could find this information more quickly if he sets up

another book called the ledger, of which each page is a detailed record of one account (for example Accounts Payable)." "For each account (sometimes called a ledger account), ... " "Posting: "The 'reference' provides the journal number where the journal entry which uses this account may be viewed in its entirety." "The process of transferring information from the journal to the applicable ledger account is called posting." Manual Accounting Systems: "... except that journal entries are posted to the ledger accounts in batches, usually at the end of every month."

3-29 "The debit and credit balances of all the accounts in the ledger are then totaled and compared to ensure that there have been no posting or adding mistakes and that total debits equal total credits. This is called a trial balance." "With manual accounting systems, you can only get current financial statements by posting all the journal entries made since the last financial statements, preparing a trial balance and completing the work-sheet."


Section/Pg #. Highlight Classified Financial Statements: The Balance Sheet, Assets: "Assets are all the physical things and other items of value owned by a company." Current Assets: "Current assets are assets which are converted into cash in the ordinary course of business within one year or less." Fixed Assets: "Fixed assets are assets such as land, buildings, equipment, and trucks that are used in operating the business and which have a long life." Liabilities: "Liabilities are all the debts and money owed to others by the company." "Current Liabilities - The term current liabilities generally refers liabilities that are due to be paid within a year or less." Long-Term Liabilities: "Long-term liabilities are liabilities that are not due to be paid within the next year after the balance sheet date."

3-30 Equity: "This category is important because it provides information about how much

money was invested in the company and how much money was earned by the company." The Income Statement: "Categories on the income statement include revenues, expenses, and income." Revenues: "Revenues are categorized by the types of goods or services provided." Note and highlight the sample balance sheet. " Expenses: "Expenses are the amounts that a company spends to provide goods or services to its customers or to carry on its business, except amounts spent to acquire assets." Operating Expenses - "Operating expense are expenses that are incurred while providing the goods or services that the company sells."

3-31 "Administrative expenses - These are expenses incurred in the administration of the business, and do not particularly relate to providing particular goods or services." Income: "This can be called net income, profit or net profit and is the income for the period referred to on top of the Income Statement." Highlight the Income Statement sample. "

3-31 - 3-32 Adjusting Entries: When and Why: "The financial statements shown on the previous pages are correct in that they account for every transaction, but they need to be adjusted for changes related to accruals."

3-32 "The accrual method of accounting says that we should try to match revenues and expenses at the time we record revenues." "An accounting period is the period of time over which income is calculated." "With a manual accounting system, adjusting entries are usually done after the trial balance is prepared and proven to be correct." Prepaid Expenses: "Prepaid expenses are assets that have been paid for but which will become expenses over time. Insurance is a good example."

3-33 Use of Supplies: "The way to determine the amount of the expense is to physically take

an inventory of what is left at the end of the accounting period."


Section/Pg #. Highlight Bad Debts: "The Allowance for Doubtful Accounts has a credit balance, which is what we expect since it is subtracted from Accounts Receivable." Depreciation: "This allocation of the cost of a piece of equipment over its useful life is called depreciation."

3-34 "... more information is provided if we create accounts called Accumulated Depreciation for each, which have credit balances for the same reasons as the Allowance for Doubtful Accounts account." Highlight Table 3-31. "There the 'net' means net of depreciation."

The "MACRS" (Modified Accelerated Cost Recovery System) Depreciation System "Under the MACRS depreciation system, most assets are now assigned to 3-, 5-, 7-, 10-, 15-, or 20-year recovery period categories, except for real estate, which is depreciated over 31.5 years, or 39 years if placed in service after May 12, 1993. Residential rental property is depreciated over a period of 27.5 years." "Under the MACRS system, all personal property in the 3-, 5-, 7-, and 10-year categories is depreciated using the old 200% declining balance method of depreciation from pre-1981 days, and 15- and 20-year property is depreciated under the 150% declining balance method. Real estate may now only be depreciated on a straight-line basis." (Note: Land is not depreciated. This is not in your book.)

3-36 Expensing of Equipment in the Year of Purchase: "Contractors are allowed to expense up to $108,000 of equipment in the year of purchase in 2006, $125,000 for tax years beginning in 2007, and $250,000 for tax years beginning in 2008. For tax years beginning in 2011 and thereafter, the maximum deduction is reduced to $25,000 per year and is not adjusted for inflation." Amortization of Intangible Assets: "For all practical purposes, 'amortization' is essentially another way of saying 'depreciation,' except that amortization implies that the cost of an item is written off in equal amounts over a period of years or months." "Accountants like to use the term 'depreciation' when referring to the write-off of tangible assets and 'amortization' when referring to the write-off of intangible assets." Accrued Expenses: "Some expenses have accrued (been incurred even National hasn't yet received a bill or invoice from the supplier of the goods or services) by year end." (Table 3-33 reflects the journal entry.)

3-37 Accrued Revenues: "Some revenues have been earned by year end even though

National hasn't invoiced a customer or received payment. A good example is interest accrued on the company's cash in the bank." (Table 3-36 reflects the journal entry.)

3-40 Closing the Books: "If he wants to continue to use the current ledger, he must make the

balances of all the revenue and expense accounts zero so that the new accounting period does not reflect any of last year's revenues or expenses." "This process is called closing the books." Table 3-40 reflects the journal entry to close the books.

3-41 Opening the Books: "He must set up a new ledger so that the asset, liability and equity

account balances are the same as those of the old ledger ...This is called opening the books."


Section/Pg #. Highlight 3-42 Other Types of Legal Organizations: "There are two other principal forms of

companies: partnerships and corporations. The accounting for them is exactly the same as for a proprietorship (National Construction), except that the equity section is set up a little differently for each."

3-42 - 3-43 Partnerships: "Each partner who invests money in a company has an Invested Capital account in his name." Tables 3-44, 3-45, 3-46, 3-47 3-48, and 3-49 show samples of treatment of equity for the partners.

3-43 Corporations: "The equity section of sole proprietorships and partnerships is known as

Stockholders' Equity for corporations." 3-44 "Preferred Stocks - Preferred stock may pay to its owners a dividend (a payment made

to shareholders by a corporation out of after-tax earnings) that is usually fixed in amount or percent. Preferred stockholders have preference." "Common Stock - Common stock has no preference to dividends and no fixed rate of return." "Since a corporation is a separate legal entity from its owners, it must keep its own accounting records."

3-45 Subsidiary Ledgers: Why and How: "Subsidiary ledges are a system in which a particular ledger account (such as Accounts Receivable) has its own ledger called a subsidiary ledger." Accounts Receivable: "This subsidiary ledger keeps track of who your customers are, what their addresses are, and how much money they owe you." "It also breaks down the money they owe you by current receivables, overdue 30 to 60 days and any other period that you might decide to follow."

3-46 Accounts Payable: "This subsidiary ledger accomplishes many of the same things as the Accounts Receivable subsidiary ledger and provides a record of who is owed money and for how long." Payroll: "This subsidiary ledger allows management to keep track of employee wages, all the deductions that must be collected and paid out, as well as the employer's associated expenses." Inventory: "This subsidiary ledger allows management to keep track of what is in stock and how much it costs." Open Invoice Accounting for Payables and Receivables: "Instead of merely keeping track of the outstanding balance of each vendor and customer, open invoice accounting keeps track of each individual invoice, together with each partial payment made against it. When fully paid, it becomes optional whether the invoice and its payments are retained or purged."

3-47 Payroll Accounting: "While this section shows you how to prepare a typical

payroll, it is essential that you refer to and comply with the latest editions of the various regulations and documents supplied by the Internal Revenue Service and Florida's taxation department."

3-48 "The preparation of your company's payroll includes the following: (6 bullets)."



"The employer needs this information in order to fill in the 941 (Employer's Quarterly Federal Tax Return) form, to determine his FUTA (Federal Unemployment Tax Act) payment frequency, to fill in the W-2 (Wage and Tax Statement) and the 940 (Employer's Annual Federal Unemployment Tax Return) forms at the end of the Year, and to able to answer any questions employees may have regarding the composition of their paychecks."

3-49 Regular Pay

Overtime Pay: Overtime pay for hourly paid employees is determined by multiplying the employee's overtime rate of pay by the number of overtime hours worked during the pay period." (Note: Overtime hours are all hours worked in excess of 40 hours per week. This is discussed more in Chapter 5.) Salary: "Salary is a fixed amount paid to the employee for the pay period in question."

3-50 Commission: "Commission is a performance-related amount paid by the employer to

the employee for the pay period in question." "... this amount should be entered as the commission component of gross earnings for the pay period."

3-51 Vacation Pay: "Vacation pay is normally at the time employees take their vacation. It is

then recorded as part of the employee's gross wages." 3-53 Social Security Tax and Medicare Tax: "The Social Security Tax rate is 6.2 percent

with a $102,000 wage base, and the Medicare Tax rate is 1.45 percent with an unlimited wage base." "When accumulated gross annual earnings exceed $102,000, you stop deducting the 6.2 percent amount for Social Security Tax. You continue to deduct the 1.45 percent amount for Medicare."

3-55 Determining the Employer's Associated Expenses. (See Circular E in this chapter for

better description of federal payroll taxes.) Social Security and Medicare Tax Expense FUTA (Federal Unemployment Tax Act) Expense: (Note: - Rate --6.2% of the first $7,000 paid an employee, with a maximum discount of 5.4% allowed by the IRS, resulting in a net of 0.8%.)

3-56 SUTA (State Unemployment Tax Act) Expense: "Employers are assigned a SUTA percentage rate by the state's tax department. These rates can vary from employer to employer."

3-57 "The FIT Taxable Earnings and Social Security Taxable Earnings and Medicare Taxable

Earnings, in addition to Social Security Taxable Tips and Medicare Taxable Tips, are amounts that must also be entered on the 941, Employer's Quarterly Federal Tax Return." "The FUTA Taxable Earnings is information required for use with the 940, Employer's Annual Federal Unemployment Tax Return." "SUTA Taxable Earnings are entered on the state reporting forms each quarter."


Section/Pg #. Highlight 3-58 Recent Developments: "Employers that deposited more than $200,000 in employment

taxes and other depository taxes for calendar year 2007 must use electronic funds transfers to remit all depository taxes. You may continue to timely deposit using paper coupons without penalty through December 31, 2008." Inventory Accounting: "Ownership passes to the company at the point of delivery or at the point where the goods are fob (free on board), fas (free alongside ship), cif (cost, insurance and freight prepaid)." "When the goods arrive, a receiving report should be prepared ..."

3-59 "Inventory items being used on a project should be recorded by requisitions which indicate the transfer of inventory to the project." Accounting Control of Inventory: "Accounting control of inventory can be carried out by several methods: (4 bullets)." "Average cost is the simplest method ..."

3-63 State Sales Tax: "If the company is tax exempt, the purchase cost of inventory items is

the amount paid to the supplier for the full cost of goods." See Table 3-72 for an example of state sales tax.)

3-65 Cost Accounting: "Cost accounting is a system of allocating cost and expenses incurred

to a particular division, department or project so that management can quickly determine if the division, department or project is meeting its budget or is earning the company any money."

3-66 Cash Flow: "Money is still the ultimate labor-saving device, and cash flow is the lifeblood

of any business organization."

3-66 – 3-67 The following are a number of effective methods of maximizing cash flows for your business: (11 bullets)."

3-71 Types of Capital: "Capital needs can be divided into three basic stages which

incidentally should parallel the successful growth of your business: 1. Initial (start-up) capital, 2. Day to day (working) capital, 3. Business growth (expansion) costs."

3-71 – 3-72 Start-up Capital: "Some of the expenses to take into consideration to determine the

amount of capital you will need are: (all listed items)." 3-72 "Starting capital can be obtained in many ways: A contractor may: (all listed items)."

Working Capital: "Day-to-day working capital needs are those costs associated with doing business; such as direct - indirect job costs, which vary with sales, production and projects." "In addition to the previous sources, a contractor may: (all listed items)."

3-72 – 3-73 Expansion: "Expanding a business usually requires a great deal of capital but the

amount is usually much easier to identify than start-up or day-to-day capital." "In addition to the sources listed under start-up and working capital, you may: (all listed items)."

3-73 Debt Restructuring: "There is a fourth type of capital need called debt restructuring which is used in the case of financially distressed businesses."


Section/Pg #. Highlight Sources of Capital: "The investment of money into the enterprise can come from several sources. The investment can be made in the form of bank loans, common stock, preferred stock, or debentures." Bank Financing: "The following terms are the most commonly used in the commercial lending environment:" Principal - the amount of the borrowing; the principal plus interest will be the amount to be repaid." Term - "the length of time for which the loan is made. The principal and interest must be paid in total by the end of the term for which the loan is made." Rate - "the effective annual rate of interest which will be paid on the principal borrowed." Maturity value - the total principal and interest that will be due at the end of a term loan." Single payment loan - also known as a term loan, this loan accrues interest until maturity and is paid in one payment which covers the principal and interest at the maturity date of the loan." Ordinary interest - also known as simple interest, this is the interest computed on the loan principal." (Note the example.)

3-74 Compound Interest - interest computed every month and added to the principal amount

so that the following month's interest is computed using the total of the principal amount plus interest from prior months." Discount - the actual amount of cash received in a discount loan will be less than the principal amount due at the end of the loan. The difference between the cash received and the principal due at the end of the loan is known as the discount." Installment Loan - a loan on which monthly payments are made even though interest is computed as though the entire principal is outstanding for the term of the loan." (Note example.) Truth in Lending: "Truth in lending laws require the lending institution to disclose the effective annual interest rate to a borrower." Corporate Financing: "For those businesses which have incorporated, there are several alternative sources of obtaining capital." "The following explains each alternative:" Common stock - the most common form of corporate stock ownership." Preferred stock - another form of capital stock. Preferred stock has defined preferential rights over common stock."

3-75 "Par value - the value per share assigned to each share of common stock, for example,

par value of $100 per share." "No par value stock - stock without a par value, but usually having a stated value of some amount per share."


Section/Pg #. Highlight Additional paid in capital, Convertible preferred stock, Cumulative preferred stock, Class B common stock, Mortgage payable, Note payable, Debentures, Convertible debentures, Letter of credit, Line of Credit, Capital lease. (Highlight each of these source titles and be able to locate them in the event a question is asked in the test.)

3-76 Estimating Process 3-77 Accumulating Construction Costs: "The contractor faces some unusual accounting

requirements because, at any given period of time they may have several jobs (contracts) in progress. It is important that the accounting system provide detailed records of what is happening on a job to job basis."

3-78 Change Orders

Equipment Types of Contracts: "There are four basic types of contracts used in construction: Fixed- price or lump-sum contracts, Unit-price contracts, Cost-plus contracts, and Time and material contracts."

3-79 Time and Material Contracts: "Time and material contracts are similar to cost-plus contracts and generally provide for payments to the contractor on the basis of direct labor hours at fixed hourly rates and the cost of materials or other specified costs." Accounting Unique to Contractors: "The following items require unique accounting due to the nature of construction contracts. (1. — 6.)" Revenue Recognition: "While there are some minor miscellaneous variations, there are two methods of determining when and how much revenue should be recognized on a construction contract. These methods are the percentage of completion method and the completed contract method." The Percentage of Completion Method: "The percentage of completion method is also required for tax purposes for construction companies with $10,000,000 or more in annual sales." "When calculating revenue due under the percentage of completion method, the most commonly used industry practice is to compute the percentage by dividing the total costs incurred to date by the total estimated contract costs. This method is referred to as "the cost-to-cost" method for measuring the percentage of completion."

3-80 Completed Contract Method: "Under the completed contract method, no profit is

recognized until the contract is fully or very nearly completed." "In general, a contract in excess of 98% or 99% completed should be recognized as complete under the completed contract method." "Since revenues are not recognized as the contract progresses and costs are not recognized as expenses as the contract progresses ... "The billings for work completed are treated as a liability on the balance sheet of the contractor who uses the completed contract method, and the costs incurred on contracts are treated as assets. The right of offset exists for each contract in progress so that each can result in either a net asset or a net liability being recorded for that particular contract."



3-82 Costs and Estimated Earnings in Excess of Billings and Billings in Excess of Costs and Estimated Earnings: "Under the percentage of completion method for revenue recognition, it is extremely rare that the amount of billings are exactly equal to the costs incurred plus the percentage of earnings recognized based on the relative completion of the contract. When these factors change, they result in a computed number reflected in either current assets 'costs and estimated earnings in excess of billings' or in current liabilities as 'billings in excess of costs and estimated earnings.'" (Study the example.) Provisions for Anticipated Losses on Uncompleted Contracts: "A separate liability account is usually included in the current liability section of the balance sheet and is often labeled 'estimated liability to complete contract."

3-83 Retainages: "Retainage terms vary, but the most common ones are to retain 10% on all

billings until the end of the contract, or to retain 10% on the first half of the contract with no retainage on the last half, resulting in a 5% retainage at the end of the contract for the entire contract. It is important that the contractor's accounting system provide for recognition of retainage receivable in a different way than the current receivables on the contract." "The contractor's system should provide for a periodic aging of the receivables. The most common categories for the aging would be 0-30 days, 30-60 days, 60-90 days and over 90 days." "Many contractor's systems also provide two separate accounts in the general ledger for receivables, one for accounts receivables currently due and another for retainages receivables." Overhead Costs: "Some contractors only charge direct costs to jobs and rely on the gross profit from jobs to cover all overhead costs." "Indirect costs are those costs which are incurred that are related to jobs in general, but are not specifically related to any given job."

3-85 When estimating jobs for the coming year, what should be put into the bid calculation for overhead? "There is no right answer. Since the contract revenues are unknown, the best the contractor can do is estimate volume and arrive at an estimated overhead percentage." Comparison of Income Statement Results and Cash Flow: "Those not acquainted with the financial statement process often mistakenly believe they can tell how their company is doing by whether the cash flow is positive or negative. In fact, a company can be operating very profitably and still have negative cash flow and, conversely, be operating at substantial losses and still have positive cash flow."

3-89 Types of Financial Ratios: "It is useful to classify ratios into four basic types: (1. - 4.)

Calculating Financial Ratios: "The Current Ratio; is determined by dividing the total current assets by the total current liabilities." (current assets/current liabilities). "The Quick Ratio; is determined by adding cash, accounts receivable, and marketable securities together and dividing by current liabilities." (current assets - inventory/current liabilities.) "Leverage Ratios: measure the investment of owners as compared to the financing provided by the company's creditors."


Section/Pg #. Highlight 3-90 "The debt to equity ratio is the most commonly used leverage ratio." (All liabilities

/stockholder's equity.) "The Times Interest Earned Ratio: Is calculated by adding operating income before income taxes + interest expense together and dividing by interest expense. The higher this ratio is the more safety is present for the lender who is relying on the company's operating results to be repaid." "The Number of Days of Contract Revenue in Receivables, is found by dividing the contract revenue for the year by a number, usually 365, and dividing the resultant per day revenue number into the contract receivable number. The lower the number resulting from this computation, the lower the amount of cash tied up in receivables." "Profitability ratios provide indication regarding how effectively the company is being managed. Three common_ ratios are (1) the gross profit margin, (2) the net income as a percent of sales ratio, and (3) the return on beginning stockholders' equity percentage." "These ratios, plus the computation of general and administrative expenses as a percentage of sales are computed as follows: (1. - 3.)"

3-91 Note the list of all different types of ratios. 3-93 Analysis of Purchase Decisions: Methods of acquiring the asset:

Renting for the job at hand: "When substantial future use cannot be assured the acquisition decision is a simple one, and the answer is a short term rental." Lease the equipment: "Where equipment is needed for the immediate term, leasing will generally reduce the front end cash outlays but may result in greater overall cash outflows." Purchase of equipment: "Where appropriate utilization is assured over the estimated life of the asset, a purchase should be considered." Methods used to evaluate purchase decisions: The present value method: "The present value method uses the present equivalent of the dollars that will be received in future time periods. This is done by applying discount factors shown in the following table (Present Value Table), to the future sums to convert them to their present value."

3-94 Return on Investment method: "The major disadvantage of the return on investment method is that it does not take into consideration the scale of the investment and the timing of cash flows."

3-96 - 3-97 Payroll Tax Requirements: "In addition to the previous requirements, the employer is required to file periodic payroll tax returns with various governmental agencies. These include, but are not limited to the following: (1. - 7.)"

3-97 Miscellaneous Tax Issues: "By May 1st of each year, businesses in Florida are required to file a tangible personal property tax return with each Florida county in which they had tangible personal property on January 1st of that year."

3-98 - 3-99 Services Provided by CPA's: "The four different levels of letters which might

accompany the financial statements are: (1. - 4.)"

3-100 - 3-101 "The following are cash management procedures and suggestions to help cash availability problems: (20 bullets)."


Section/Pg #. Highlight 3-102 - 3-104 Bank Reconciliation: (Note the process of reconciling a bank statement.) 3-105 - 3-110 Glossary: Highlight the following terms within the glossary: Bad debts, Bid shopping,

Front end loading, Liquidated damages, and Posting. 3-112 Definitions: Highlight the following definition: 11. Billings in Excess of Costs and

Estimated Earnings on Uncompleted Contracts. 3-115 Table of Contents 3-119 I-1 Davis-Bacon and Other Labor Laws: a. The Davis-Bacon Act (DBA): "The Davis-

Bacon Act requires the payment of prevailing wage rates (which are determined by the U.S. Department of Labor) to all laborers and mechanics on Federal government and District of Columbia construction projects in excess of $2,000." b. The Contract Work Hours and Safety Standards Act (CWHSSA): CWHSSA requires time and one-half pay for overtime (0/T) hours (over 40 in any workweek) worked on the covered project. " In the box, highlight: "CWHSSA does not apply to prime contracts of $100,000 or less."

3-120 ―c. The Copeland Act (Anti-Kickback Act)"

"d. The Fair Labor Standards Act (FLSA)" Construction Contract Provisions: "a. The Labor Standards Clauses: The labor standards clauses describe the responsibilities of the contractor concerning Davis-Bacon wages and obligate the contractor to comply with the labor requirements."

3-121 'b. Davis-Bacon Wage Decisions: The Davis-Bacon wage decision (or wage

determination) is a listing of various construction work classifications, such as Carpenter, Electrician, Plumber and Laborer, and the minimum wage rates (and fringe benefits, where prevailing) that people performing work in those classifications must be paid."

3-123 2-1 The Wage Decision: a. The Work Classifications and Wage Rates 3-124 b. Posting the Wage Decision

2-2 Additional "Trade" Classifications and Wage Rates, a. Additional Classification Rules: "1) The requested classification is used by construction contractors in the area of the project." "2) The work that will be performed by the requested classification is not already performed by another classification that is already on the wage decision."

3-125 2-3 Certified Payroll Reports "You'll need to submit a weekly certified payroll report (CPR) beginning with the first week that your company works on the project and for every week afterward until your firm has completed its work." "a. Payroll Formats The easiest form to use is DOL's WH-347, Payroll."

3-126 - 3-127 e. Payroll Retention "The prime contractor must keep a complete set of all of the payrolls for every contractor (including subcontractors) for at least 3 years after completion of the project."


Section/Pg #. Highlight 3-133 2-7 Typical Payroll Errors and Required Corrections: "The following paragraphs

describe common payroll errors and the corrective steps you must take."

3-134 - 3-135 a. through I.

3-135 - 3-136 2-8 Restitution for Underpayment of Wages: a. through d.

3-136 e. Unfound Workers: "The contract administrator will continue attempts to locate the unfound workers for 3 years after the completion of the project. After 3 years, any amount remaining in the account for unfound workers will be credited and/or forwarded by the contract administrator to HUD."

3-149 Publication 15 (Circular E), Employer's Tax Guide 2 "FUTA Tax Rate. The FUTA tax rate is 6.0% for 2012." 3 Hiring New Employees: Eligibility for employment. "You must verify that each new

employee is legally eligible to work in the United States. This will include completing the U.S. Citizenship and Immigration Services 9USCIS) Form 1-9, Employment Eligibility Verification."

4 Information Returns: "You may be required to file information returns to report certain

types of payments made during the year. For example. you must file Form 1099-MISC. Miscellaneous Income, to report payments of $600 or more to persons not treated as employees ...‖

4 – 5 Recordkeeping: "Keep all records of employment taxes for at least 4 years."

"Your records should include the following information: (14 bullets)" 6 Calendar: By January 31: Furnish Forms 1099 and W-2: File form 941 or Form 944:

File Form 940; File Form 945. By February 15: Request a new Form W-4 from exempt employees.

7 On February 16: Forms W-4 claiming exemption from withholding expire. By February 28: File paper Forms 1099 and 1096. By February 29: File paper Forms W-2 and W-3. By March 31: File electronic Forms 1099, 8027, and W-2. By April 30, July 31, October 31, and January 31: Deposit FUTA taxes. File Form 941. Before December 1: New Forms W-4.

10 3. Family Employees 15 7. Supplemental Wages: "Supplemental Wages identified separately from regular

wages. "a. Withhold a flat 25% (no other percentage allowed)." "Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes."

19 Tax Rates and the Social Security wage base limit. "The employee tax rate for social security is 4.2% on wages paid and tips received before March 1, 2012. The employee tax rate for social security increases to 6.2% on wages paid and tips received after February 29, 2012. The employer tax rate for social security remains unchanged at 6.2%. The social security wage base limit is $110,100. The 2012 employee tax rate for Medicare is 1.45% (amount withheld) each for the employee and employer (2.9% total). There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax."



20 Lookback Period. 21 Monthly Deposit Schedule: "Under the monthly deposit schedule, deposit

employment taxes on payments made during a month by the 15 th day of the following month." Semiweekly Deposit Schedule: "Under the semi-weekly deposit schedule, deposit employment taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday."

23 How to Deposit: "You must deposit employment taxes, including Form 945 taxes, by

electronic funds transfer: Deposit Penalties: "For amounts not properly or timely deposited, the penalty rates area as follows: (Highlight all penalties.)"

24 12. Filing Form 941 or Form 944: "Form 941 must be filed by the last day of the month

that follows the end of the quarter."

28 Collecting under withheld taxes from employees. 28 – 29 14. Federal Unemployment (FUTA) Tax: Computing FUTA Tax. "For 2012, the FUTA

tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year." "The credit may be as much as 5.4% credit, of the FUTA taxable wages. If you are entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%."

30 – 34 Special Rules for Various Types of Services and Payments. (Review this table.)

35 – 37 Percentage Method: Table 5. Percentage Method - 2012 Amount of One Withholding Allowance. (Review the Percentage Method tables.)

38 – 57 (Review Withholding Tables) 4-5 Rick Management, Insurance and Bonding: Introduction to Risk Management:

"'RISK' is generally defined as uncertainty concerning a loss or gain. RISK exposures are usually separated into two general categories: 1) Speculative risk which can produce a loss, no loss or a gain, and 2) Pure risk which can produce only a loss or no loss." "Exposures to loss are generally broken down into four categories: (1. - 4.)" The Risk Management Process: "From a pure risk standpoint the process involves: (1. - 5.)"

4-6 Insurance: "Mortgage companies and/or banks require property insurance coverage for real or other property to protect them from loss due to fire, windstorm, theft, etc." Property Loss Exposures: "Property insurance policies can be purchased on a replacement cost (new for old) or an actual cash value (depreciated value) basis. Property insurance policies may contain a coinsurance provision." "If the insured purchases less than the amount required under the insurance contract, the insured will be required to share in the loss." Highlight the example through the end of the paragraph.

4-7 "7. Builders risk coverage which is normally purchased by the owner or general contractor. Most builders risk policies cover the structure being constructed and may be extended to cover materials while in transit or at temporary storage facilities." "9 a. Blanket Crime Policy - This policy affords, under a single limit of insurance, broad coverage against employee dishonesty, loss of money and security loss inside and outside the premises, loss of money orders, counterfeit paper currency, and depositors forgery."



4-8 "c. Fidelity Bonds - This policy provides employee dishonesty coverage for contractors' employees who handle money or material." Financial Loss Exposures: "Business income insurance, often referred to as business interruption insurance, is available to cover losses to property which cause a decrease in revenue or increase in expense." Business Liability Exposure.

4-9 "The general aggregate limit is the most the insurance company will pay in any one year regardless of the number of occurrences while construction is ongoing." "Products/completed operations refers to occurrences that cause bodily injury or property damage after all work has been completed and put to its intended use." "The limit is usually $5,000 or $10,000 and the coverage will pay regardless of fault." Contractual Liability Exposures: "Two of the most common exculpatory clauses are indemnification and hold-harmless clauses." "As indemnification clause typically requires the indemnitor (contractor) to compensate (pay) the indemnitee (owner, architect, engineer, and their employees) for loss caused by liability imposed on the indemnitee for damages because of injury or property damage arising out -of the construction activity." "A hold-harmless provision requires one of the contracting parties to 'hold-harmless' another contracting party for specified kinds of losses; under the hold-harmless agreement, one party is required to pay damages and defense costs on behalf of the other party."

4-11 Employee Benefits Liability Coverage: "This coverage would protect the contractor in the event of a claim involving errors or omissions in the administration of group life, health, unemployment, social security or similar plans." Umbrella Liability Policy: "The policy is in excess of the Commercial General Liability and Business Auto policy limits."

4-12 Computation of Premium Rates: "Insurance companies normally compare the contractor's experience with similar contractors for the past 3-5 years and either debit a contractor with higher than normal loss experience or credit a contractor with lower than normal loss experience." "A contractor should regularly (every six months or at least annually) review the driving records of his employees by ordering Motor Vehicle Reports. Motor vehicle reports should be reviewed for all new drivers hired."

4-13 - 4-14 Surety Bonding versus Insurance: "Surety bonding is not insurance. Insurance is a

two party agreement between the individual (insured) and the insurance company (Insurer). In insurance, losses are contemplated and the law of large numbers is used to determine a premium and spread the losses among the policyholders."

"Three Party Agreement: "Suretyship is a three party agreement between the contractor (Principal), The Guarantor (Surety), and the Owner (Obligee). It does not contemplate a loss." "The surety will rely upon the principal of indemnity to make themselves whole."


Section/Pg #. Highlight Types of Bonds: "There are generally 4 types of bonds used in the construction industry. The Bid Bond is a guarantee that the contractor will enter into a contract at the price stipulated in the bid proposal and will provide the required performance and payment bonds. The second type of bond is the Performance Bond. The performance bond guarantees the contractor will perform the work according to the contract. The third type is the Payment Bond which guarantees the contractor will pay all subcontractors, labor and material suppliers who have provided labor and material on the project." The fourth type of bond is the Maintenance Bond which guarantees that the contractor's work will be free from defects in materials and workmanship over a specified period of time set forth in the bond."

4-14 Bid Bonds: "There are two types of bid bonds. One is a Forfeiture Obligation, which states that if you are low bidder, and you do not enter into a contract according to the bid documents, then you will forfeit the bid amount stated on the bid bond." "The second obligation is a Difference in Bid guarantee which states that if you are low bidder, and do not enter into a contract according to the bid documents, then you will pay the difference between your bid and the next qualified responsible bidder ..." Performance and Payment Bonds: "There are two types of performance and payment bonds. One type is a combined performance and payment bond, which stipulates the combined amount of the obligation on the face of the bond." "The other type is a separate performance and separate payment bond. This stipulates the fixed amount under each bond." Maintenance Bonds: "The standard performance and payment bond includes a 12 month maintenance period, with no additional premium. The maintenance bond may be extended longer than 12 months, with additional premium due."

4-15 Underwriting the Risk: Three C's of Underwriting: "Capital refers to the contractor's

financial status and bill paying ability." "Character relates to the contractor's reputation in the industry." "Capacity relates to the contractor's experience, past performance, equipment and personnel."

4-16 Principle of Indemnity: "Indemnity is the legal principle by which the party offering the

guarantee (surety) will be indemnified (reimbursed) by the principal (contractor) for losses/damages incurred caused by non-perforrriance of the contract to the owner (obligee)." Financial Statements: "Financial statements can be prepared under three methods: AUDIT, REVIEW OR COMPILATION." "An AUDIT requires detailed and documented verification of all aspects of the balance sheet and profit and loss statement." "A REVIEW is less comprehensive in scope. It does require the CPA to make certain inquiries regarding the veracity of the information being presented but to a lesser degree and scope than the audit." "A COMPILATION is very limited in scope. It consists mainly of taking information from the books and records of the contractor and putting it into an organized format without verification."


Section/Pg #. Highlight 4-17 "However, the audit would be the most desirable from the surety's point of view due to

the scope and nature." Income Recognition: "The financial statement may be presented using several methods of income recognition. Cash, Completed Contract, Pure Accrual, or Percentage of Completion." Ratios: "The general rule of thumb is to determine the net quick which is cash, accounts receivable, plus cost in excess of billings and estimated earnings, subtracting all current liabilities. The difference is the contractor's net quick. The contractor's net quick times a factor of 10 will approximate the program allowable by the surety." What does a bond cost: "Rates charged by individual surety's may vary depending on the capital character and capacity of the firm and can range from 1% - 5% of the contract price." "The standard surety association rate for a class B contract (General Construction) is as follows:" (Highlight bond rate table.)

4-18 "Where time for completion as stipulated in the contract is over 12 months or 366 calendar days, the basic premium is increased by 1% per month for each month over 12 months (Disregarding fractions of the month)." Small Business Administration Guaranty (SBA): "Surety's can use the Small Business Administration, Bonding Guarantee Program. The program guarantees a portion (70%-90%) of the surety's risk for newly started, minority, or other disadvantaged contractors. The maximum single bond amount is $2,000,000 and the contractor cannot exceed annual revenue limits averaged over a 3 year period by class of business, per 13 CFR 121.201. The SBA Bond Guaranty Program charges the contractor a premium $7.29 per thousand, in addition to the premium charged by the surety and the SBA receives 26% of the bond premium from the respective surety."

5-11 "Some of the more important statutes that we will discuss in this chapter include:" Highlight the following titles: Labor Management Relations Act (LMRA) Florida's Right to Work Laws The Fair Labor Standards Act (FLSA - Wage and Hour Law) Davis-Bacon and Related Acts, Title VII of the Civil rights Act of 164.

5-12 The Age Discrimination in Employment Act (ADEA)

Equal Pay Acts, The Americans with Disabilities Act of 1990 (ADA) The Occupational Safety and Health Act (OSHA) Other Laws and Regulations Employee Retirement and Income Security Act of 1974 (ERISA) Consumer Credit Protection Act, "Still further, the Florida Right to Know Law mandates that employers under certain circumstances must advise employees of dangers inherent in the exposure or use of certain toxic substances." Polygraph Protection Act of 1988.

5-13 Consolidated Omnibus Budget Reconciliation Act (COBRA)



Family and Medical Leave Act of 1993 Immigration Reform and Control Act of 1986 (IRCA).

5-14 -5-15 Florida Right to Work Laws:

Requirements - Prohibitions: "Florida is a 'Right-to Work' state." "This law prohibits the following three types of agreements:" "'Union Shop' Agreements - an agreement whereby an employee is forced to join a union within 30 days of hire or the effective date of the agreement, whichever occurs last, under penalty of discharge." "'Agency Shop' Agreement - an agreement whereby the employee is not forced to join a union at any time but must pay union an amount equivalent to union dues, whether or not he is a union member, under penalty of discharge." "'Maintenance of Membership' Agreement - an agreement whereby the employee who joins a union is not permitted to resign from the union under penalty of discharge."

5-15 Fair Labor Standards Act (FLSA - Wage and Hour Law): General Requirements:

"The FLSA is a federal statute which prescribes minimum wages of $7.25 per hour for non-overtime work, overtime compensation at time and one-half the employee's regular rate of pay for hours worked in excess of 40 in any one workweek, equal pay for equal work between the sexes, child labor standards and certain record keeping requirements." Exemptions: "The FLSA exempts so-called administrative, executive, professional, and certain outside sales employees and certain computer related employees, among others, from its provisions and authorizes the U.S. Department of Labor to enact regulations defining these categories which have the force of law." Tests for Exemption: § 541.400 General rule for computer employees: "(a) Computer system analysts, computer programmers, software engineers or other similarly skilled workers in the computer field are eligible for exemption as professionals under section 13(a)(1) of the Act and under section 13(a)(17)of the Act." "(b) The section 13(a)(1) exemption applies to any computer employee compensated on a salary or fee basis at a rate of not less than $455 per week, ... exclusive of board, lodging or other facilities, and the section 13(a)(17) exemption applies to any computer employee compensated on an hourly basis at a rate not less than $27.63 an hour. In addition, under either section 13(a)(1) or section 13(a)(17) of the Act, the exemptions apply only to computer employees whose primary duty consists of:"

5-16 Highlight items (1) through (4)(c). 5-17 § 541.500 General rule for outside sales employees. "(a) The term 'employee

employed in the capacity of outside salesman' in section 13(a)(1) of the Act shall mean any employee: ((1) - (2)(c))."

5-18 § 541.300 General rule for professional employees. "(1) Compensated on a salary or

fee basis at a rate of not less than $455 per week ..." (Highlight items (2) - (2)(b)) § 541.200 General rule for administrative employees. "(1) Compensated on a salary or fee basis at a rate of not less than $455 per week ..." (Highlight items (2) - (2)(b))



5-19 § 541.100 General rule for executive employees. "(1) Compensated on a salary basis at a rate of not less than $455 per week ..." (Highlight items 92) - (2)(b))

5-20 Overtime Pay Requirements: "Unless specifically exempted, employees covered under

the Act must receive overtime pay for hours worked in excess of 40, at a rate not less than time and one-half their regular rate of pay." "Additionally, the Act does not require overtime pay for hours in excess of eight per day or for work on Saturdays, Sundays, holidays, or regular days of rest as such, although many companies do overtime for such hours." Each Work Week Stands Alone: "The Act takes a single work week as its standard and does not permit the averaging of hours over two or more weeks." Determining the Work Week: "An employee's workweek is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods. It need not coincide with the calendar week, but may begin on any day and at any hour of the day." Time of Payment: "There is no requirement that overtime compensation be paid weekly. The general rule is that overtime earned in a particular work week must be paid on the regular payday for the period in which the work week ends." Regular Rate of Pay: "Before overtime pay can be computed it is necessary to determine the employee's regular rate, since the Act requires payment for overtime hours at not less than one and one-half time the regular rate of pay." "The regular rate of pay may be more than the federal statutory minimum $7.25 but it cannot be less."

5-21 Regular Rate is a Rate Per Hour: "The Act does not require employers to pay

employees on an hourly rate basis." Hourly Rate Employees: "If an employee is employed solely on the basis of a single hourly rate, the hourly rate is the 'regular rate." (Note and highlight the example.) Hourly Rate and Bonus: (Note and highlight the example.) Day Rates and Job Rates: "An employee may be paid a flat sum for a day's work or doing a particular job, without regard to the number of hours worked in the day or at the job, and received no other form of compensation."

5-22 Employee Paid on a Salary "If an employee is employed solely on a weekly salary

basis, the regular hourly rate of pay is computed by dividing the salary by the number of hours which the salary is intended to compensate." (Note and highlight the example.) Piece Worker: "When an employee is employed on a piece-rate basis (so much per piece, building, dozen, gross, etc.) the regular rate of pay is computed by adding together the total earnings for the work week from piece rates and all other earnings (such as production bonuses) and any sums paid for waiting time or other hours worked." (Note and highlight the example.)

5-23 Salary for Periods Other than a Week: "A monthly salary can be converted to its equivalent weekly wage by multiplying 12 (the number of months in a year) and then dividing by 52 (the number of weeks in a year). A semi-monthly salary can be converted into its work week equivalent by multiplying by 24 and dividing by 52. (Note and highlight the examples.)


Section/Pg #. Highlight Fixed Salary for Fluctuating Hours: "An employee may receive a salary where his/her hours of work fluctuate from week to week, and where the employee is paid with a clear understanding that the salary constitutes straight time pay for all hours worked, whatever the number and whether they are few or many." (Highlight example).

5-24 Commission Payments: "Commissions (whether based on a percentage of total sales or of sales above a specified amount or on some other formula) are payments for hours worked and must be included in the regular rate."

5-26 Bonuses: "Among those excludable payments are discretionary bonuses and gifts and payments in the nature of gifts on special occasions. Non-discretionary bonuses must be totaled in with other earnings to determine the regular rate on which overtime must be paid." Discretionary Bonuses: "A bonus need not be included in the regular rate if the employer retains discretion both (1) that a bonus will be paid, and (2) that the amount is not determined until the end, or near the end, of the bonus period."

5-27 Pay for Foregoing Holidays and Vacations 5-28 "Show-Up" and "Call-Back" Pay: "Some employment agreements provide for a stated

number of hours pay if the employee is not provided with the expected amount of work, and where the employee shows up for work." (Note the example.) On-Call Pay": "If employees who are on-call are not confined to their homes or any particular place, but are only required to leave word where they may be reached, the hours spent on-call are not regarded as working time."

5-30 Record Keeping: "Employers are required by regulation to keep so-called 'hard records' such as payroll, employment contracts or agreements, and sales and purchase records for 3 years. All other required records, so-called 'soft records,' must be kept for two years." "The following information must be recorded for each covered employee: Identifying Information: (1) - (5); Hours: (1) - (3); Wages: (1) - (8)." Construction Industry Child Labor Restriction Type of Work: "Generally, children aged 15 and under may not be employed in a number of occupations, including Construction. 29 CFR§§ 570.33, 570.119."

5-31 "Children aged 16 and 17 may work in construction related operations, but may not be involved in certain 'particularly hazardous' occupations at a construction site. Those occupations include: (6 bullets)." Child Labor Laws No. 3: "Under Florida Statute Section 450.061(2), no minor under 18 years of age is permitted to work in any of the following occupations." (Highlight items (a) - (p).)

5-31 - 5-32 Hours: "As to hours, under the FLSA, minors who are 14 and 15 may work outside

school hours in various non-manufacturing, non-mining, non-hazardous jobs under the following conditions: (1) - (3)."

5-32 "Minors who are 16 or 17 may work unlimited hours in any non-hazardous occupation."

For minor's age 14 and 15:


Section/Pg #. Highlight "The allowable work hours are: Fifteen (15) hours a week when school is in session; three (3) hours a day, between 7:00 a.m. and 7:00 p.m. if school is scheduled for the next day. Eight (8) hours a day, between 7:00 a.m. and 9:00 p.m. on days when there is no school the next day. Forty (40) hours a week during the summer and holidays." For minor's age 16 and 17: "The allowable work hours are Thirty(30) hours a week when school is in session; eight (8) hours a day, between 6:30 a.m. and 11:00 p.m. if school is scheduled the next day. No restrictions on hours during vacation and holidays, or when school is not scheduled on the next day." "Employers are required to obtain proof of age for all minors (17 years and younger) unless: (1) - (4)." "Employers are required to give employees under 18 years of age at least a 30-minute break after more than 4 continuous hours work."

5-33 Davis-Bacon - Related Acts: Coverage: "The Davis-Bacon Act covers all employers

with contracts valued in excess of $2,000, to which the United States or the District of Columbia is a party, for the construction, alteration and/or repair of public works, and which involves the employment of mechanics or laborers." Penalties - Sanctions:" Debarment from government contracts for up to three years may also be imposed."

5-34 Title VII of The Civil Rights Act of 1964 (Title VII): Enforcement: "Because Florida has

its own anti-discrimination statute a charge must be filed within 300 days of an event triggering prohibited discrimination."

5-35 "If the EEOC chooses not to sue when 'cause' is found, determines it is unable to make a

finding, finds 'no cause' or if 180 days elapsed after a charge is filed, the EEOC will issue a 'Notice of Right to Sue' letter. This Notice enables a charging party to sue individually to obtain any desired relief, provided that the charging party files suit within 90 days after receiving the Notice." "There are strict time limits within which charges mustbe filed: (4 bullets)."

5-37 Age Discrimination in Employment Act of 1967 (ADEA): Enforcement: "A charge

must be filed with the EEOC within 300 days of the alleged discriminatory act, or 30 days after termination of the state administrative proceeding, whichever is earlier."

5-40 Federal Rehabilitation Act of 1973: Enforcement: "An aggrieved party must file a

complaint of disability discrimination with the OFCCP within 300 days of an alleged discriminatory act." 5-41 Americans with Disabilities Act: I. Coverage: "Entities covered by the employment

provisions of Title I of the ADA (called a 'covered entity') are: (1) Employers with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year."

5-42 IV. Special Issues: A. Medical Examinations - Inquiries: "Pre-employment medical

examinations are prohibited, with the exception of inquiries of an applicant as to the applicant's ability to perform job-related functions."


Section/Pg #. Highlight 5-45 Public Whistle-blowers Act: Requirements - Prohibitions: "The Act protects covered

employees from retaliation for disclosing their employer's violations of law that may pose a danger to public health, safety or welfare, or for alleging improper use of government office or gross waste of funds."

5-46 - 5-47 Garnishment: Requirements - Prohibitions: "Specifically, the Act limits the amount of

an individual's earnings which may be subject to garnishment to the lesser of 25% of weekly disposable earnings or the amount by which weekly disposable earnings exceed thirty times the minimum wage."

5-47 Safety and Health: Occupational Safety and Health Act: Exemption: "OSHA standards apply to private sector employers in construction with one or more employees."

5-48 Florida Clean Indoor Air Act

5-49 Penalties - Sanctions: "An individual who violates the prohibitions against smoking, is

subject to a non-criminal fine of up to $100 for a first offense and up to $500 for each subsequent offense." Drugs in the Work Place: Drug-Free Workplace Act of 1988: Coverage: "General - The Drug-Free Workplace Act covers employers on all government contracts where the employer's contract is for $25,000 or more." Requirements - Prohibitions: "General - A covered employer must: ... within 30 days after receiving notice of a conviction of a drug violation occurring at the workplace either take appropriate personnel action' against the employee involved or require the employee to participate in a drug abuse assistance or rehabilitation program."

5-50 Privacy: Employee Polygraph Protection Act of 1988: Requirements - Prohibitions:

General: "The Act generally prohibits an employer from: requiring, requesting or suggesting that any employee or applicant take a lie detector test; using the results of a lie detector test relative to any employee or applicant; ..."

5-51 Penalties - Sanctions: "The Act allows the Secretary of Labor to impose civil penalties

of up to $10,000 for violations of the Act and allows the Secretary of Labor to obtain injunctive relief against violations of the Act." Employee Benefits: Unemployment Benefits:

5-52 Requirements - Prohibitions: Unemployment Compensation Taxes: "These taxes

cannot be deducted in whole or in part from the employee's wages." 5-53 Amount of Benefits: "An eligible individual is entitled to weekly unemployment

compensation benefits in an amount equal to 1/26 of the individual's total wages for insured work paid during the quarter of the base period in which his or her total wages paid were the highest, but not less than $32 or more than $275." Reporting – Record Keeping: "An employer is required to keep, for five years, work records identifying employees, employment periods, hours worked, wages earned and any special payments (i.e. bonuses, gifts) made to employees." Penalties - Sanctions: "Further, a failure to file required reports when due will result in the imposition of a penalty of $25.00per report for each 30 day period (or fraction thereof) the report is late."



5-54 Workers' Compensation Law: Coverage: "The Act applies to all businesses with four or more employees. In the construction industry, businesses with one or more employees are covered." Requirements: "The employee must give notice to the employer within 30 days of an injury, who must then report it to the insurance carrier within 7 days of the notification." Enforcement: "The Act also provides for possible criminal conviction carrying a fine of no more than $500 or imprisonment for not more than one year."

5-57 Immigration Reform and Control Act of 1986 (IRCA): Coverage: General: "The provisions prohibiting the hiring and retention of unauthorized aliens and the provisions requiring employment verification apply to all employers." Employment Verification: "The 1-9 must be completed by the employer and the employee within 3 business days from the day employee begins work."

5-58 Record Keeping: "The 1-9 must be kept for all current employees throughout their

employment. For terminated employees, the 1-9 must be retained by the employer for three years after the date of hire or one year after the date that the individual no longer works for the employer - whichever is the later date. "Special Issues Relating to the Construction Industry: Independent Contractors: "Those who engage the services of independent contractors are not responsible for verifying the employment eligibility of the employees of the independent contractor.'

5-59 Worker Adjustment and Retraining Notification Act (WARN): Requirements -

Prohibitions: General: "WARN requires that employers covered by WARN provide employees, their collective bargaining representative, if any, the pertinent unit of local government and the state dislocated worker unit 60 days advance notice of a 'plant closing' or 'mass layoff'."

5-265 "Legislation passed in early 2012 made several changes to Florida unemployment taxlaw. The Legislature has changed the name of the Florida's Unemployment Compensation Law to the Reemployment Assistance Program Law."

5-274 State Unemployment Tax Act (SUTA): "Workers do not pay any part of the Florida unemployment tax and employers must not make payroll deductions for this purpose." Reporting Wages and Paying Unemployment Taxes: General Liability Requirements: "A business is liable for state unemployment tax if, in the current or preceding calendar year, the employer: (1) has paid at least $1,500 in wages in a calendar quarter; or (2) has had at least one employee for any portion of a day in 20 different calendar weeks in a year; or (3) is liable for the Federal Unemployment Tax as a result of employment in another state."

5-276 Voluntary Coverage: "Coverage remains in effect until the employer provides written

notice, by April 30th, to terminate coverage for the current year." Note the Coverage Requirements table.

5-277 - 5-278 Employment Not Covered: "Some of these exemptions include: (19 bullets)." 5-278 Employee Leasing Companies: "The leasing company must notify DOR within 30 days

of the initiation or termination of the company's relationship with the client company."



5-279 Payrolling: "Payrolling is an agreement between employers whereby payrolls for two or

more employers are consolidated for tax purposes with one employer reporting the employees of the other(s). Payrolling is not permitted; ..." Tax and Wage Reporting: Where to Report Employees: "There are four tests to determine to which state an employee should be reported: 1. - 4."

5-280 Employer's Quarterly Report (UCT-6): "The Employer's Quarterly Report must be

submitted by the end of the month following the calendar quarter for which the report is due." Highlight the schedule in the table below.

5-281 Employers Must Submit a Report Every Quarter Regardless of Employment

Activity: Taxable Wage Base: 5-282 Highlight and study both taxable wage base examples.

Reporting Wages: "Casual labor is work performed that is not in the course of the employer's regular trade or business and is occasional, incidental, or irregular." Taxable Wages: (25 bullets).

5-283 Exempt Wages: (8 bullets). 5-285 When to Notify the Department: (18 bullets).

Termination of Liability: "An employer's account is eligible for termination if the liability requirements have not been met for an entire calendar year. In this instance, application for termination must be submitted no later than April 30 of the following year."

5-286 Penalty and Interest Charged for Late Filing and Payment: "Failure to file UCT-6

reports timely will result in a penalty charge of $25 per month or fraction of a month as long as the report is late." Tax Audits and Required Employer Records: Records Required and Examined: "The employer must maintain true and accurate work records for a period of five calendar years."

5-287 Tax Rate: Regular: "The tax rate can vary from the maximum of 5.4 percent (.0540) to

the minimum rate of 0.10 percent (.0010) as mandated by law." "When an employer first becomes liable for the payment of unemployment taxes, the beginning tax rate is 2.7 percent (.0270) until the employer has reported for approximately ten quarters, depending on the quarter of the year the employer established liability." "Unemployment Compensation Tax Rate Notices (UCT-20) are mailed to employers immediately prior to the new tax rate effective date. A protest of the assigned tax rate must be in writing, within 20 days from the date the Unemployment Compensation Tax Rate Notice is mailed."


Section/Pg #. Highlight 5-288 Successor Accounts: "If the new owner becomes liable by succession and elects to

transfer the predecessor's tax rate, a Report to Determine Succession and Application for Transfer of Experience Rating Records (UCS-1S), must be signed and returned within 30 days from the date the notification of option is mailed to the successor or the transfer will be denied." In the next paragraph highlight "and returned within 30 days" and "not returned within 30 days." In the following paragraph, highlight "within 30 days." Read both paragraphs and be familiar with their contents. "In order to qualify for partial transfer, the successor employer must have notified the Department of the acquisition within 90 days of the date the succession began, otherwise, the transfer will be denied."

5-293 Benefits: Monetary Qualifications: "An unemployed worker can qualify for benefits only

if the individual has worked in covered employment and earned a minimum amount of wages in the base period. (1. - 5.)"

5-294 Qualifying for Benefits: "To be eligible for benefits, the worker must, for each week

benefits are claimed: 1. - 8." Disqualification: Read and become familiar with the 12 reasons for disqualification.

5-296 How Benefits are Charged: "Unemployment compensation benefits paid to eligible

claimants are paid from the Unemployment Compensation Trust Fund and are charged to employers on a percentage basis. The chargeable percentage is based on the amount of wages each employer paid the worker as compared to the worker's total wages for insured work during the base period of the claim."

5-297 Labor Disputes: "Unemployment compensation benefits will not be paid to those

employees or class of employees or class of employees directly involved in the labor dispute." Appeals: "Any appeal must be filed within 20 days from the mailing date of the determination."

5-297 - 5-298 Employer's Checklist for Compliance: (Become familiar with all items listed under the

heading, there is no need to highlight any of them.) 6-5 When is Workers Compensation Coverage Needed: "The Florida Workers'

Compensation Act is applicable to an employer in the construction industry who employs one or more full or part time employees. Sole proprietors, partners and corporate officers are considered employees. Construction limited liability company members are considered corporate officers." "Every contractor or subcontractor must, as a condition to receiving a building permit, show proof that workers' compensation has been secured for all employees or provide a certificate of election to be exempt. Furthermore, contractors need to require subcontractors to provide proof of coverage or a certificate of election to be exempt." "Out of state contractors doing business in Florida are required to submit proof of workers' compensation coverage under Florida law and there must be evidence that the contractor's carrier or self-insured fund has knowledge of the contractor's intent to do business in the state of Florida."



6-6 Exempt Classifications: "The following activities are not construction jobs: (1) - (14)." "The employees of the subcontractors are considered the statutory employees of the general contractor and as such, the general contractor must purchase workers' compensation for the employees of the subcontractor." "If a contractor becomes liable to pay workers' compensation benefits for the employees of the subcontractor, the contractor is entitled to recover from the subcontractor all benefits the contractor is required to pay plus interest, unless the contractor by written contract has agreed to purchase coverage." "A subcontractor who knowingly presents false information as to the existence of coverage when in fact there is none, commits a third degree felony."

6-7 Selecting Workers' Compensation Coverage: "It should be remembered that the

employee cannot be required to pay part of the workers' compensation premium. Likewise, the employee cannot be required to sign a statement that he will not seek to obtain workers' compensation benefits if injured on your job."

6-8 Deductible Insurance: "Each insurer transacting or offering to transact workers compensation insurance in Florida must make deductibles available at the written request of the employer." "Deductible amounts of $500, $1000, $1,500, $2000 and $2,500 per compensable claim must be made available."

"The deductible program must not be used in conjunction with the Florida coinsurance or deductible/coinsurance programs." "An insurer must not be required to offer a deductible to an employer if, as a result of a credit investigation, the insurer determines that the employer is not sufficiently financially stable to be responsible for the payment of the deductible amounts." "Other optional deductible programs, coinsurance programs and deductibles with coinsurance programs continue to be available, but not on the same policy."

6-9 Self-Insurance Pools or Funds: Individual or Free-Standing Self-Insured’s: "Certain

individual employers may choose to insure themselves as individual, 'free standing' self-insured’s. This concept of coverage is controlled by the Department of Labor and Employment Security and allows for employers to provide workers' compensation coverage by individually paying benefits. Because of high security requirements and the need to obtain excess insurance coverage, this plan for coverage is ordinarily utilized by the larger employer with significant capital and the ability to manage claims and provide loss prevention services."

"Oftentimes, self insureds use third-party administrators to handle their loss prevention and claims." "A specially created guaranty fund contributed to by all self insureds has been created to provide additional protection." "Self insureds should be aware that they are subject to possible assessments if deficits develop in the Guaranty Fund and losses cannot be paid for insolvent employers."

6-10 Failure to Obtain Workers' Compensation Coverage: "In such an instance, the injured employee can require you to pay workers' compensation benefits individually or can sue you in civil court. If a suit is filed in civil court you cannot defend the claim on the basis that the injured employee's injuries were caused by himself or a fellow employee or that the injured worker assumed the risk of his employment." "In addition, since workers' compensation coverage is mandatory, the Department of Labor and Employment Security can close your business down if there is no coverage whether or not an accident occurs."



6-10 Employer Responsibilities: Before The Accident Occurs:

6-11 "Failure to provide appropriate notice to the Division of Workers' Compensation can result in a fine for each injury/accident not timely reported." "The employer should be aware of the fact that an injured worker is not required to pay anything towards his medical bills." "The employer should be in a position to advise the injured worker as to what benefits the worker should be anticipating following his accident." "Basically, the injured worker is entitled to two-thirds of his average weekly wage (up to a maximum) for the healing period that is needed to recover from the compensable accident. The first seven days of disability are not paid unless the injured worker is off work for more than twenty-one days. The maximum weekly benefit is set each January 1 and the maximum for 2012 is $80." "At the time the doctor releases the injured worker to return to work, and assuming that he has a permanent impairment as diagnosed by the doctor, he is entitled to weekly benefits depending on the percentage of the impairment." "Should death occur, the employee's beneficiaries are entitled up to $150,000.00 in death benefits plus $7,500.00- F.S. 440.16(1)(a)(b) in funeral costs." Responsibilities After The Accident: "The employee should also be advised of the employer's expected safety rules and regulations since if there is a knowing refusal to follow safety rules and regulations, there can possibly be a 25% reduction in the employee's workers' compensation benefits if an accident does in fact occur. The injured worker has thirty days in which to advise the employer of the fact that an accident occurred."

6-12 Following the Accident: "Within seven days of knowledge of an accident, the employer must report to the carrier notice of injury on a specific form provided by the Division or Workers' Compensation. Failure to report this injury to the carrier may involve up to $2,000 fine per occurrence." "First-Aid Cases requiring treatment on site that do not require medical treatment for which charges will be incurred and do not disable the employee for more than seven days do not need to be reported." "It should be noted, however, that the accident has to be recorded on a Notice of Injury. If the case later meets the reporting requirements, the Notice of Injury must be filed within seven days after the employer has knowledge of the change of status." "The Florida workers' compensation law also requires the reporting of an on the job injury/accident resulting in death of an employee within twenty-four hours to the Division of Workers' Compensation, Bureau of Industrial Safety and Health in Tallahassee. It should be remembered that the employer is responsible to notify the carrier of an accident and must also notify the Division of Workers' Compensation of a death." "Any violation of the rule for reporting accidents can subject the employer to a penalty of up to $500.00. The employer is also required to report to the carrier the employee's wages in order for the carrier to compute the worker's compensation benefits." "The extent of the worker's loss wage benefits are determined based upon the wages of the employee for the thirteen weeks preceding the date of the accident." "Basically, therefore, workers' compensation is a no fault system."



6-13 Employer Return-to-Work Program: Florida Law on Return to Work: "Florida law strongly encourages employers to return injured workers to a previous or modified position. Failure of an employer to return an employee to work can result in a fine to the employer. If the injured worker refuses employment that is suitable for him, compensation benefits can be discontinued." Light or Altered Duty: "Light or altered duty jobs should be identified within your organization before accidents occur."

6-14 "What has commonly been referred to as the "three strikes you’re out" theory has become a valuable tool to deny benefits to that employee who really does not want to return to work.

6-15 Financial Impact of Workers' Compensation on the Contractor: "Workers'

compensation has a major financial impact on the Florida businessman." "Employers are classified by types of jobs their employees perform and are "manually rated" per $100 of payroll. For example, Roofers have a classification code of 5551 and pay as of 1/1/2007 their premium at a rate of $28.05 per $100 of payroll." "Once your manual premium is determined, your business is then compared to other businesses within your classification to see if you are better, worse, or equal to your contemporary employers. If you are better than your contemporaries, you will get a discount. If worse, you will pay in excess of what others pay in your same classification for the exact same coverage." "Your comparison to other employers within your industry is known as the experience modification factor ("experience mod")." "If you can reduce the number of accidents on your job and mitigate the claims dollars paid out, then you can save money for your business."

6-16 Note and highlight the roofer examples. 6-17 Florida Division of Workers' Compensation: Employer Exemption Information:

General Information: "Notice of Election to be Exempt - 440.05(14), F.S. - An officer of a corporation who elects exemption from this chapter by filing a certificate of election under this section may not recover benefits or compensation under this chapter." Eligibility: Construction Industry Exemption Requirements: (4 bullets). Additionally: (5 bullets).

6-18 How to apply for an exemption and what to expect. (Note the instructions on this

page.)

6-21 Florida Division of Workers' Compensation: Key Coverage And Exemption Eligibility Requirements: Key Coverage Requirements: (4 bullets). Out-of-State Contractors Requirements: (3 bullets).

6-22 Where to Find Workers Compensation Insurance Coverage? "Contact an insurance agent. You can also contact the following insurance agent associations: (3 bullets)."

6-25 Florida Division of Workers' Compensation: Notice of Election To Be Exempt: "The Division of Workers' Compensation offers a Notice of Election to be Exempt system for individuals to apply for or renew a Certificate of Election to be Exempt electronically and, if the applicant is engaged in the construction industry, to submit electronic payment of the exemption fee."


Section/Pg #. Highlight Forms: (Highlight all 4 forms listed and their use.)

6-27 - 6-34 Florida Division of Workers' Compensation: Frequently Asked Questions:

Employer FAQs: Read and become familiar with the questions and answers. 6-25 - 6-41 Florida Division of Workers' Compensation: Frequently Asked Questions:

Employer FAQs: Read and become familiar with the questions and answers.

6-62 440.015 Legislative Intent. "The workers' compensation system in Florida is based on a mutual renunciation of common-law rights and defenses by employers and employees alike."

6-63 440.02 Definitions. (1) "Accident" (4) "Carrier" (5) "Casual as used in this section refers only to employments for work that is anticipated to be completed in 10 working days or less, ..." (6) "Child," "grandchild," "brother," and "sister" include only persons who at that time of the death of the deceased employees are under 18 years of age, or under 22 years of age if a full-time student in an accredited educational institution." (8) "Construction industry"

6-64 (12) "Department" (13) "Disability" (14) "Division" (15)(a) "Employee" (15)(b)3. "An officer of a corporation who elects to be exempt from this chapter by filing a notice of the election with the department as provided in s. 440.05 is not an employee." (15)(c) "Employee" includes 1. - 3."

6-67 (23) "Person" 6-68 (28) "Wages" (29) "Weekly Compensation Rate" 6-70 440.03 Application. "Every employer and employee as defined in s. 440.02 shall be

bound by the provisions of this chapter."

6-72 440.055 Notice Requirements. "An employer who employs fewer than four employees, who is permitted by law to elect not to secure payment of compensation under this chapter, and who elects not to do so shall post clear written notice in a conspicuous location at each worksite directed to all employees and other persons performing services at the worksite of their lack of entitlement to benefits under this chapter."

6-73 440.09 Coverage. "(3) Compensation is not payable if the injury was occasioned

primarily by the intoxication of the employee; by the influence of any drugs, barbiturates, or other stimulants not prescribed by a physician; or by the willful intention of the employee to injure or kill himself, herself, or another."

6-77 440.10 Liability for Compensation. "(1)(a) Every employer coming within the provisions of this chapter shall be liable for, and shall secure, the payment to his or her employees, or any physician, surgeon, or pharmacist providing services under the provisions of s. 440.13, of the compensation payable under ss. 440.13, 440.15, and 440.16." "(b) "In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one of the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment."



6-78 440.102 Drug-free workplace program requirements. (1) DEFINITIONS. (a) "Chain of Custody"

6-79 (b) "Confirmation test" (c) "Drug" (d) "Drug rehabilitation program" (e) "Drug test" or "test"

(f) "Employee" (g) "Employee assistance program" (h) "Employer" (i) "Initial drug test" (k) "Medical review officer" or "MRO" (I) "Prescription or nonprescription medication" (m) "Public employer"

6-79 - 6-80 (n) "Reasonable-suspicion drug testing" "Among other things, such facts and inferences

may be based upon: 1. - 6."

6-80 (p) "Special-risk position" (q) "Specimen" (2) DRUG TESTING. (3) NOTICE TO EMPLOYEE AND JOB APPLICANTS.

6-81 "(b) An employer not having a drug-testing program shall ensure that at least 60 days

elapse between a general one-time notice to all employees that a drug-testing program is being implemented and the beginning of actual drug testing."

6-86 440.104 Competitive bidder; civil actions. "(1) Any person engaged in the construction

industry, as provided in s. 440.02, who loses a competitive bid for a contract shall have a cause of action for damages against the person awarded the contract for which the bid was made, if the person making the losing bid establishes that the winning bidder knew or should have known that he or she was in violation of s. 440.10, s. 440.105, or F.S. 440.38 while performing the work under the contract."

6-87 "(b) Any person who receives notice of a suit filed under this section and fails, within 20

days after receipt of such notice, to petition the court to join as a party to the suit is barred from bringing a cause of action under this section against the winning bidder on the contract at issue." 440.105 Prohibited activities; reports; penalties; limitations. "(b) In the absence of fraud or bad faith, a person is not subject to civil liability for libel, slander, or any other relevant tort by virtue of filing reports, without malice, or furnishing other information, without malice, required by this section or required by the bureau, and no civil cause of action of any nature shall arise against such person:"

6-88 "(4) Whoever violates any provision of this subsection commits insurance fraud,

punishable as provided in paragraph (f)." 6-89 "(f) If the monetary value of any violation of this subsection: 1. - 3." 6-94 440.12 Time for commencement and limits on weekly rate of compensation. "(1)

Compensation is not allowed for the first 7 days of the disability, except benefits provided for in 440.13." "(2)(a) ... however, the increase to 100 percent from 662/3 percent of the statewide average weekly wage shall apply only to injuries occurring on or after August 1, 1979.

6-111 440.14 Determination of pay. "(1)(a) If the injured employee has worked in the

employment in which she or he was working on the date of the accident, whether for the same or another employer, during substantially the whole of 13 weeks immediately preceding the accident, her or his average weekly wage shall be one-thirteenth of the total amount of wages earned in such employment during the 13 weeks."

6-112 440.15 Compensation for disability. "(1) PERMANENT TOTAL DISABILITY. (a) In

case of total disability adjudged to be permanent, 662/3 percent of the average weekly wages shall be paid to the employee during the continuance of such total disability"


Section/Pg #. Highlight 6-113 "(2) TEMPORARY TOTAL DISABILITY. (a) Subject to subsection (7), in case of disability

total in character but temporary in quality, 662/3 percent of the average weekly wages shall be paid to the employee during the continuance thereof, not to exceed 104 weeks except as provided in this subsection, ..." "(3) PERMANENT IMPAIRMENT BENEFITS. (a) Once the employee has reached the date of maximum medical improvement, impairment benefits are due and payable within 14 days after the carrier has knowledge of the impairment."

6-116 (4) TEMPORARY PARTIAL DISABILITY. "(e) Such benefits shall be paid during the continuance of such disability, not to exceed a period of 104 weeks ..." (5) SUBSEQUENT INJURY.

6-117 (6) EMPLOYEE REFUSES EMPLOYMENT. (7) EMPLOYEE LEAVES EMPLOYMENT.

(8) EMPLOYEE BECOMES INMATE OF INSTITUTION. (9) EMPLOYEE ELIGIBLE FOR BENEFITS UNDER THIS CHAPTER AND FEDERAL OLD AGE, SURVIVORS, AND DISABILITY INSURANCE ACT.

6-118 (10) EMPLOYEE ELIGIBLE FOR BENEFITS UNDER THIS CHAPTER WHO HAS

RECEIVED OR IS ENTITLED TO RECEIVE REEMPLOYMENT ASSISTANCE. (11) FULL-PAY STATUS FOR CERTAIN LAW ENFORCEMENT OFFICERS. (12) REPAYMENT.

6-120 440.16 Compensation for death. (1) "(a) Within 14 days after receiving the bill, actual

funeral expenses not to exceed $7,500." "(b) Compensation, ... shall not exceed $150,000, ..." "1. To the spouse, if there is no child, 50 percent of the average weekly wage, such compensation to cease upon the spouse's death." "2. To the spouse, if there is a child or children." "3. To the child or children, if there is no spouse, 331/3 percent for each child." "4. To the parents, 25 percent to each, such compensation to be paid during the continuance of dependency." "5. To the brothers, sisters, and grandchildren, 15 percent for each brother, sister or grandchild."

6-121 440.185 Notice of injury or death; reports; penalties for violations. "(1) An employee

who suffers an injury arising out of and in the course of employment shall advise his or her employer of the injury within 30 days after the date of or initial manifestation of the injury." "(2) Within 7 days after actual knowledge of the injury or death, the employer shall report such injury or death to its carrier, in a format prescribed by the department, and shall provide a copy of such report to the employee or the employee's estate. The report of injury shall contain the following information: (a) - (e)."

6-122 "The carrier shall, within 14 days after the employer's receipt of the form reporting the

injury, file the information required by this subsection with the department." "(3) In addition to the requirements of subsequent (2), The employer shall notify the department within 24 hours by telephone or telegraph of any injury resulting in death."


Section/Pg #. Highlight 6-123 440.19. Time bars to filing petitions for benefits. "(1) Except to the extent provided

elsewhere in this section, all employee petitions for benefits under this chapter shall be barred unless the employee, or the employee's estate if the employee is deceased, has advised the employer of the injury or death pursuant to s. 440.185(1) and the petition is filed within 2 years after the date on which the employee knew or should have known that the injury or death arose out of work performed in the course and scope of employment."

6-124 440.192 Procedure for resolving benefit disputes. "(1) Any employee may, for any

benefit that is ripe, due, and owing, file with the Office of the Judges of Compensation Claims a petition for benefits which meets the requirements of this section and the definition of specificity in s. 440.02. "The employee shall also serve copies of the petition for benefits by certified mail, or by electronic means approved by the Deputy Chief Judge, upon the employer and the employer's carrier."

6-125 "(8) Within 14 days after receipt of a petition for benefits by certified mail or by approved electronic means, the carrier must either pay the requested benefits without prejudice to its right to deny within 120 days from receipt of the petition or file a response to petition with the Office of the Judges of Compensation Claims."

6-126 440.20 Time for payment of compensation and medical bills; penalties for late

payment.

6-127 "(7) If any compensation, payable under the terms of an award, is not paid within 7 days after it becomes due, there shall be added to such unpaid compensation an amount equal to 20 percent thereof, which shall be paid at the same time as, but in addition to, such compensation, unless review of the compensation order making such award is had as provided in s. 440.25." "(8)(a) In addition to any other penalties provided by this chapter for late payment, if any installment of compensation is not paid when it becomes due, the employer, carrier, or servicing agent shall pay interest thereon at the rate of 12 percent per year from the date the installment becomes due until it is paid, ..."

6-131 440.21 Invalid agreements. "(1) Any agreement by an employee to pay any portion of

premium paid by her or his employer to a carrier or to contribute to a benefit fund or department maintained by the employer for the purpose of providing compensation or medical services and supplies as required by this chapter is invalid."

6-133 440.25 Procedures for mediation and hearings. "(1) Forty days after a petition for

benefits is filed under s. 440.192, the judge of compensation claims shall notify the interested parties by order that a mediation conference concerning such petition has been scheduled unless the parties have notified the judge of compensation claims that a private mediation has been held or is scheduled to be held."

6-134 "(4)(a) If the parties fail to agree to written submission of pretrial stipulations, the judge of compensation claims shall conduct a live pretrial hearing. The judge of compensation claims shall give the interested parties at least 14 days' advance notice of the pretrial hearing by mail or by electronic means approved by the Deputy Chief Judge."

6-135 "(5)(a) Such an order shall become final 30 days after mailing of copies of such order to

the parties, unless appealed pursuant to such rules." 6-143 440.381 Application for coverage; reporting payroll; payroll audit procedures;

penalties. "(6)(a) - Highlight the entire paragraph.


Section/Pg #. Highlight 6-171 440.54 Violation of child labor law. "... however, the total compensation so payable

shall not exceed double the amount otherwise payable under this chapter. The employer alone, and not the insurance carrier, shall be liable for the increased compensation or increased death benefits provided for by this section."

7-5 Loss Control: "A complete safety program or loss control program should address all loss areas. These include: (7 bullets)."

7-6 Occupational Safety and Health Act (OSHA): Employer Responsibilities: Record Keeping: "Summary of Occupational Injuries and Illnesses, OSHA Form 300/300A." "Recordable incidents must be entered within seven days of learning of its occurrence. After completing the summary at the end of the calendar year, the 300A form must be posted from February 1st through April 30th of the year following the year in which the form is maintained." "Supplementary Record of Occupational Injuries and Illnesses (OSHA No. 301)." General Duty Clause (5A1): The General Duty Clause states Each employer shall furnish to each of his employees employment and a place of employment which is free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees." Display: "On multi-contractor projects, each contractor is responsible for displaying a poster unless a common area is available to all employees of all contractors on a daily basis."

7-7 Exempt Employers: "However, despite the broad coverage afforded by the Act, the

regulations have excluded the following groups of employers: 1. - 3." 7-8 ―Employees include part-time, temporary, or limited service workers." 7-9 Employers Regularly Exempt from OSHA Record Keeping: "1. small employers." "An

employer who had no more ten (10) employees at any time during the calendar year immediately preceding the current calendar year need not comply with any of the requirements of this part except the following: (a) - (b)." The Log of Occupational Injuries and Illnesses, OSHA No. 300/300A

7-10 "Any employer may maintain the log of occupational injuries and illnesses at a place

other than the establishment or by means of data processing equipment or both." "Under 1904.30 There is available at the place where the log is maintained sufficient information to complete the log to date within 7 working days after receiving information that a recordable case has occurred." "Column G. The date of death must be entered if an occupational injury results in a fatality. In some cases, an employee may be injured, but not die until several weeks or months later. If the death occurs within 5 years following the end of the calendar year in which the injury occurred, and the injury was work related, the entry on the log must be changed to reflect a fatality; the entries in column 2 through 6 must be lined out, and the date of the death entered in column 1."

7-11 The Supplementary Record of Occupational Injuries and Illnesses, OSHA No. 301:

"For every injury or illness entered on the log, it is necessary to record additional information on the supplementary record, OSHA 301 (Page 7-14)."


Section/Pg #. Highlight "In addition to the log of occupational injuries and illnesses provided for under Section 1904.29(a) and (b)(1), each employer shall have available for inspection at each establishment within 7 working days after receiving information that a recordable case has occurred, ..." "The record shall be completed in the detail prescribed in the instructions accompanying Occupational Safety and Health Administration Form OSHA No. 301, ..."

7-12 - 7-14 See the samples of OSHA's Forms 300A, 300, and 301. 7-15 Location of Records: "1. Employees associated with fixed establishments. Records for

these employees should be located as follows: a. - c." "2. Employees not associated with fixed establishments." "Records for these employees should be located as follows: a. - b.(2)."

7-16 Retention of OSHA Records: "The regulations require that the log and summary, OSHA

No. 300/300A, and the supplementary record, OSHA No. 301, must be retained in each establishment for 5 calendar years following the end of the year to which they relate." Employer Decision Making: Types of decisions employers make in the record keeping process: "1. Distinguishing between employees and other workers on site." "2. Deciding if injuries and illnesses occurring to employees are recordable." "3. Determining the extent or outcome of recordable cases."

7-22 Deciding if work-related injuries are recordable: "Although the Act requires that all

work-related deaths and illnesses be recorded, it limits the recording of injuries to certain specific cases. Sections 8(c)(2) and 24(a) of the Act refer to maintaining records for work injuries other than minor injuries requiring only first aid treatment, and which do not involve medical treatment, loss of consciousness, restriction of work or motion, or transfer to another job." "1. Medical treatment. It is important to understand the distinction between medical treatment and first aid treatment since many work related injuries are recordable only because medical treatment was given."

7-28 Reporting fatalities and multiple hospitalizations: "(a) Within 8 hours after learning of

the death of any employee from a work-related incident or the in-patient hospitalization of three or more employees as a result of a work-related incident, the employer of any employees so affected shall orally report the fatality/multiple hospitalization by telephone or in person to the Area Office of the Occupational Safety and Health Administration (OSHA), U.S. Department of Labor, that is nearest to the site of the incident, or by using the OSHA toll-free central telephone number (1-800-321-OSHA)."

7-30 Requirements of the Act: Complaints: 7-31 "Employees who believe they have been discriminated against may file a complaint with

their nearest OSHA office within 30 days of this alleged discrimination." Citations: "The OSHA citation must be prominently displayed at or near the place of alleged violation for three days, or until it is corrected, whichever is later, to warn employees of dangers that may exist there."


Section/Pg #. Highlight 7-31 OSHA Civil Penalties: "The maximum allowable civil penalty now is $70,000 for each

willful or repeated violation; and $7,000 for each serious or other-than-serious violation as well as $7,000 for each violation of the posting requirements and $7,000 for each day beyond a stated abatement date for failure to correct a violation." "To ensure that the most flagrant violators are in fact fined at an effective level, a minimum fine penalty of $5,000 for a willful violation of the OSH Act was adopted by Congress." Maximum Civil Penalties: (Highlight the penalties table.)

7-32 Regulatory Violations: "Here are the base penalties, before adjustments, to be

proposed for posting requirement violations; OSHA notice, $1,000; annual summary, $1,000; and failure to post citations, $3,000." "Base reporting and recordkeeping penalties are as follows: Failure to maintain OSHA 300/300A and OSHA 301 forms, $1,000; failure to report a fatality or catastrophe within 8 hours, $5,000 (with a provision that the OSHA Regional Administrator could adjust that up to $7,000, in exceptional circumstances); denying access to records, $1,000; and not telling employees about advance notice of an inspection, $2,000."

7-33 Repeat Violations: "If the initial violation was other-than-serious, without a penalty being assessed, then the penalty will be $200 for the first repetition of that violation, $500 for the second repeat, and $1,000 for the third repeat." Failure To Abate: "In these failure to abate cases the daily penalty will be equal to the amount of the initial penalty (up to $7,000) with an adjustment for size only." "In cases of partial abatement of the violation, the OSHA Regional Administrator has authority to reduce the penalty by 25 percent to 75 percent." Adjustment Factors: "Here is how the new system for proposing penalties will operate." "The size of the adjustment factor is as follows: For an employer with only one to 25 workers, the penalty will be reduced 60 percent; 26 to 100 workers, the reduction will be 30 percent; 101 to 250 workers, a 10 percent reduction; and more than 250 workers, there will be no reduction in the penalty." "In order to qualify for the full 25 percent 'good faith' reduction, an employer must have a written and implemented safety and health program such as given in OSHA's voluntary 'Safety and Health Management Guidelines' ..."

7-36 -7-39 Components of a Safety Program: "The following ten (10) components are typical of a company program. (Highlight 1. - 10. including Example of Goals: 2a, 2b, and 2c)

7-43 Sloping and Benching Systems, and Protective Systems: Shoring.

7-44 Diagram and Table B-1 Maximum Allowable Slopes.

7-53 Safety Factors: "For general rigging and hoisting of materials a factor of '5' is acceptable, however, when the rope is to be used for hoisting or supporting personnel a safety factor of '10' must be used. (Highlight the Safety Factor formula and the example in the right column of the page.)

7-62 Knots, Bends, and Hitches: "Knots and bends reduce rope strength by about 50 percent and hitches reduce rope strength by about 25 percent."



7-64 - 7-65 General Safety: Personal Protection: "The following safety practices should be observed: by personnel who: 1. - 5."

7-65 - 7-66 "The single, most important rigging precaution is determining the weight of the loads

before attempting to lift them." "It is equally important to rig the load so that it is stable and the center of gravity is below the hook." "Such as: 1. - 16." (Pay special attention to item 13 including the 4 bullets following the paragraph.)

7-68 - 7-69 Safe Working Loads. (Note how to calculate load on slings.)

7-75 Inspection: "In general, all running ropes (except elevator ropes) in continuous service must be inspected once every working day, and a thorough inspection of all ropes in use should be made at least once a month." "Inspection involves looking for: 1. - 9."

7-82 (See table showing the different angles and factors, and study the example given in the page.)

7-90 Sling Angles: "If at all possible, keep sling angles greater than 45 degrees."

7-92 Note the hand signals shown. 8-5 What is a Contract?: "One that seems to best communicate the concept is: Mutual

manifestation (or understanding) of assent to particular duties, undertakings, or obligations that is supported by consideration (an exchange of something of value or harm to the other party). Another text book definition is: An offer, and an acceptance (mirror image) of the offer, supported by consideration (something of value or harm)." "Using the 'offer' and 'acceptance' definition of a contract there are traditional documents in the construction industry that fall into these terms, but not always in the same way." "In that case, the bid is the offer and the taking of further action, e.g. the making of a formal contract, is the acceptance." "If the acceptance of the offer contains material terms (e.g. price, quality, time) that differ from the offer, the purported acceptance with additional terms will be considered to be a counter offer. The counteroffer must then be accepted for a contract to be formed."

8-6 "There are typically three key terms of a construction contract: A) - C)"

"If work has been requested and performed without having reached an agreement, the law may allow recovery of the reasonable value of the work performed on the basis of not permitting one to be unjustly enriched to the detriment of another. This legal concept is a form of Quantum Merit (reasonable value)." Written or Oral. "Construction contracts and subcontracts that are capable of being performed within one year may be oral. Oral contracts for the purchase and sale of materials only (goods) of a value of less than $500 are enforceable." "The law requires that certain agreements MUST be in writing to be enforceable."

8-6 - 8-7 "In the construction setting the following agreements must be in writing to be enforceable: (1) - 6)"

8-7 Unlawful Contracts. "The law will not enforce a contract that has an unlawful purpose." Fixed Price Contracts. "This form of contract is most frequently used in the construction setting." "Allowances are very helpful for situations where: a) - c)."


Section/Pg #. Highlight Cost Plus Contracts. "This form of contract allows the risk of cost increases and cost reductions to be borne by the party paying for the work."

8-8 "A variation of the cost plus contract may be to provide that the parties agree to a guaranteed maximum price, or upset price, above which the contractor assumes the risk of paying for the work described in the contract." Design/Build Contracts. "This form of contract allows the responsibility for design and construction to rest with the one contracting entity." Construction Management Contracts. "The use of the term 'construction management contract' is subject to many variations. In the pure form the Construction Manager (who must be a licensed contractor for the scope of work or a general contractor) acts as the owner's agent when entering into trade contracts and serves to manage the construction process, often from the time of concept and design, offering insight and advice as to constructability and costing during the design phase. The construction manager when acting as owner's agent does not contract on his or her own financial account, but contracts and acts as agent for the owner. This concept is also referred to as a construction manager not at risk."

8-9 Implied terms. "The following are implied terms supplied by law if not otherwise addressed expressly in the agreement: 1) - 10)." "There are also some implied warranties in construction: A) - C)."

8-9 Express Terms: Parties. "It is important to name the correct parties to the contract." "It

is also important to determine whether you are doing business with the property owner, a tenant, or if you are removed a level or two from the title holder as a sub or sub-sub."

8-9 Price. "One of the key terms of a construction contract is the price to be paid for the work."

8-10 "A cost plus contract may or may not have a guaranteed maximum price."

"There are three very important contract terms that relate to price that are discussed below: A. - C." Payment. "The law implies that, unless otherwise expressly agreed in the contract, payment is due at the conclusion of the work." "A. Progress Payment. For example, 10% deposit, 25% upon completion of slab, 25% upon completion of walls, 25% upon dry-in of roof, 5% upon completion of finishes and 10% retainage payable when the job is complete and a certificate of occupancy has issued." "B. Retainage. "Retainage of a percentage (typically 10%) of the value of work performed is a concept that developed in construction contracts for two purposes: 1) and 2)." "C. Requirements to be Entitled to Payment. For example the contract may require that a release be given from the contractor and from every person working under the contractor who has served a notice to owner."

8-11 "D. Contingency Payment or Time of Payment Clauses. The party paying for the work (e.g. owner as to the contractor, and contractor as to subcontractors) may require that some funding or some other event must occur as a condition precedent to payment being earned."


Section/Pg #. Highlight "This is a time of payment clause and may read as follows: 'Payment is due to subcontractor after contractor has been paid for the work of subcontractor. However, payment will be due subcontractor within 90 days (or some other time) after billing has been made by subcontractor to contractor whether or not contractor has been paid for the work under this subcontract." E. Interest. F. Attorney Fees.

8-11 – 8-12 Scope of Work. "It should come as no surprise to learn that a careful definition of what work is to be performed for the contract price will avoid later disputes." Schedule. "When will the work be performed? Is there a start and end date? Are there particular milestones that are significant?" No damage for Delay Clause. "The parties may agree in the contract that there will be no damages for delay recoverable under the contract."

8-13 Liquidated Damages. "The parties may agree to a liquidated number of X dollars per day to be recoverable for delays that extend the date of substantial completion. A liquidated damage clause is enforceable unless it is a penalty." Waiver of Consequential Damages. "If a contract is breached by a contractor, the owner may recover substantial provable consequential damages such as loss of use, financing costs, and lost business opportunity. If a contract is breached by an owner or contractor (with respect to a subcontract) there may be recovery of provable consequential damages such as lost business opportunity to the contractor or subcontractor." Changes and Extras. "Construction is sufficiently complex that it is rare indeed for a project to be completed exactly as originally undertaken without any extras or changes."

8-14 Changed Conditions/Differing Site Conditions.

Cost Escalation. Merger Clause. Flow Down Clause.

8-14 – 8-15 Incorporation by Reference. "Some examples of documents that become incorporated

by reference into a contract are: a) - c). 8-15 "Order of Precedence. "Typical rules of legal interpretation of conflicting documents

include: a) - c)."

"An example of an order of precedence clause would be: "In the event of a conflict between or among the contract documents the following is the order of precedence and shall control: 1. - 5."

Indemnity Clause. "There is a legal principle called 'indemnity,' which stands for the proposition that if one party causes damage (e.g.. a subcontractor) and another party is vicariously liable for the acts of the party causing damage (e.g., the contractor or owner), then the party actively causing the damage or injury is obliged to hold harmless or indemnify the innocent party. This is called common law indemnity."

8-16 Insurance Clause. "Most contracts provide that the party performing the work must

provide workers compensation and general liability insurance in stated limit."


Section/Pg #. Highlight 8-17 Warranties. "The contract may require that the contractor furnish a warranty (express

warranty), as well as provide warranties from subcontractors and vendors." Third Party Beneficiaries. "The contract may provide that certain people are to be considered third party beneficiaries of the contract, or some specific obligations in the contract." Termination and Suspension. "Under the law a contract may be terminated for a material (i.e. significant) breach, but not for an immaterial (i.e. insignificant) breach, unless otherwise provided in the contract." Notice of Defect and Opportunity to Cure (Chapter 558 Florida Statutes). "There is a Florida statute that provides that unless opted out by contract, with respect to construction or design defects, there is a right of any person who is considered being sued by an owner to receive a written notice of defects and have an opportunity to inspect and cure the alleged defect. The statute provides that the giving of the notice of defect is a precondition to being able to file suit for a construction defect." "The contract between a contractor and an owner should have the following warning, unless the parties have agreed to opt out of this procedure (which opting out is not advantageous to the contractor): "ANY CLAIMS FOR CONSTRUCTION DEFECTS ARE SUBJECT TO THE NOTICE AND CURE PROVISIONS OF CHAPTER 558, FLORIDA STATUTES."

8-18 A. Initial Dispute Resolver. "This method is used in most of the AIA agreements (2007

edition). A person is named in the contract (often the architect, but this may be a construction lawyer or other person chosen by the parties -- the person should be knowledgeable about construction) as being the initial dispute resolver." B. Mediation. "This is a party driven process where the parties select a third party mediator to meet with them for the purpose of attempting to fashion an amicable resolution or settlement. Mediators make no decisions, but attempt to facilitate a negotiated settlement between or among the parties."

8-18-19 C. Non-binding Arbitration. "This is a process, if agreed, where the parties choose one

or three arbitrators. More arbitrators mean more cost, but also results in a decision from the viewpoint of more than one person." "The arbitrator(s) should be a person(s) knowledgeable about construction. JAMS and the American Arbitration Association provide a list of neutral arbitrators."

8-19 D. Binding Arbitration. "Where the parties are unable to resolve the dispute between or

among themselves, or by mediation, the parties may agree in the contract, or may agree when the dispute arises, to binding arbitration." "Some aspects of arbitration that some people like, and other people dislike, are the following 1. - 7."

8-20 E. Private Trial Resolution Judge. "The benefit is that the parties select a private judge

who they believe 1) - 2)." Dispute Review Boards. Venue. "Venue is the geographic locale where any disputes are agreed to be heard." Assignment. "The parties chose one another, hopefully based on some investigation by each party of the other party's capacity or ability to perform the contract."


Section/Pg #. Highlight Choice of Law. "One or more of the parties may be based in another state and wish to provide that the substantive law of that other state should govern the agreement." Construction Lien Waiver. "Under Florida law the construction lien rights of those performing work may not be waived in advance of performing the work."

8-21 Residential Contracts. A. Lien Law Warning. "In a contract greater than $2,500

between an owner and a contractor for improvement to single or multiple (up to four) dwelling units, ..." Highlight the notice below. Statutes of Limitation. "The purpose of dispute resolution is 1) to obtain a just result for the dispute, and 2) to put an end to disputes." "The statute of limitation for a written agreement in Florida is five years. A claim on a performance bond, being a form of written agreement, is five years." "The statute of limitations for an oral agreement, for negligence, or for other causes of action arising out of design or construction is four years."

8-21 8-22 "The time within which to sue a design professional for professional negligence

(malpractice) is two years from when the wrongful act occurred, or should have been discovered with the exercise of due diligence." "An action to enforce an equitable lien arising out of improving real property must be brought within one year."

8-22- 8-23 Measures of Damages for Breach of Contract. Breach by Party Paying for Work.

"Compensation for the later receipt of funds that were due earlier is by way of interest. A.- B. - 1. - 3."

8-23 Breach by Party Performing Work. 9-5 HISTORY OF THE CONSTRUCTION LIEN LAW. "The first Florida mechanics' lien law

was created by the Florida Legislature in 1887." "In 1990, the name of the remedy for a lien on real estate for unpaid charges in improving it was changed from the generic term 'mechanics' lien' to 'construction lien'."

9-6 WHAT KIND OF JOB IS IT? 1. Credit risk. "Understand that lien rights or bond rights

are not a substitute for proper credit evaluation." 2. Lien or Bond Claim? "One issue that should be determined at the outset is whether your payment is protected by lien rights, a bond claim, or both. Inquire of your customer and/or the owner, and/or the lender as to whether the job is 'bonded' or not." "If there is an indication that the job is bonded, request and obtain a copy of the bond from the owner, the bonded contractor, or the surety‖.

9-7 "On public (governmentally owned) jobs, recording a claim of lien is worthless. The lien law, by definition, exempts public owners and publicly owned property from the operation of the construction lien law."

WHAT IS A CONSTRUCTION LIEN? "A construction lien is a claim or charge against real property and the improvements thereon to secure a debt incurred for the improvement of the property." "The first element of a construction lien is a debt incurred to improve property."


Section/Pg #. Highlight "For a construction lien the debt is created by a contract to improve the property." "Note that there must be either a contract directly with the owner, or pursuant to a contract with someone that is in a chain of contract with the owner." "The second element of a construction lien is compliance with the procedure described in the statute."

9-7 - 9-8 DO I NEED A LICENSE? Licensing of Lienor. "Under Florida law, if you enter into a construction contract and the work you are undertaking requires a professional license (architect, engineer, etc.); or if it requires a contractor's license (including specialty contractor licenses) failure to have that license renders the contract void from the start." Also, the Construction Lien Law and the design professional or contractor licensing statute state that if a contracting license is required, no lien shall exist unless the contractor, subcontractor, or sub-subcontractor has the required license."

9-8 Licensing in Chain to Lienor. "In addition to your own licensing, you should be

concerned whether your contractor, subcontractor, or sub-subcontractor customer is licensed."

SPECIAL RULES FOR RESIDENTIAL CONSTRUCTION WARNINGS REQUIRED. Highlight the Florida Lien Law Warning. "This notice is not required in contracts or subcontracts that are not directly with the owner." "If you are improving real property that is privately owned, then you may have the remedy of a construction lien, a payment bond, or both (in addition to your other legal claims such as breach of contract)." "Three important things that the notice of commencement will tell you are: A) - C)."

9-9 Property owned by married persons. "If the improved property is owned by one or both

married persons, and the contract with the direct contractor is signed by only of the two, AND the married couple is not separated and living apart, lien rights exist against the property. The only exception is if the non-signing spouse gives to the contractor and records in the clerk's office notice of his or her objection within ten days or learning of the contract."

Condominiums. "When working on a condominium, it is important to know whether you are working for an owner of a specific unit or units, whether you are working for the developer, or condominium association." Leasehold property. "Remember that liens attach to the interest in property held by the contracting party." "If the contract for improvements is made with the tenant, then (usually) only the tenant's interest in the property (the leasehold) is subject to lien. Liens on leasehold property are generally only as valuable as the tenant is solvent." "One exception to this rule of the landlord's interest not being Lienable pursuant to a contract with the tenant is where the tenant contracts for the improvements as a requirement of the lease (not just where improvements are allowed by the lease, or improvements must be approved by the landlord). To be an improvement required by the lease, the improvement must have been a part of the bargain in the payment of rent."

9-10 Small direct contract exemptions. "You should know that if the contract price in the contract between an owner and a contractor is $2,500 or less, then the only person who has lien rights is the contractor."

"If the contract price for repair or replacement of an HVAC system is $7,500 or less, no notice of commencement is required."


Section/Pg #. Highlight Construction Lien Law not applicable to Public Owners and Public Property. "If you are working on a project that is owned by any unit of government, then the construction lien law does NOT apply." "If you are working on a project that is owned by a governmental unit, no one will stop you from serving lien notices or recording a claim of lien in the public records." "A hybrid situation is that of a private lease on public property." "One more hybrid situation is a contract with a private owner to make site improvements to adjacent public land, e.g. street, or sidewalk, in conjunction with improvements to the private land." "In the event that the work is done on land that is (or becomes) a public street or sidewalk abutting private land, and the work was done pursuant to an agreement with the owner of that abutting private land, the lien attaches to the abutting private land." "If you are improving real property that is owned by an agency of the federal government, you may have a remedy against a federal Miller Act payment bond. A payment bond is required foremost, but not all, federal projects." "If you are improving real property that is owned by the State of Florida or a unit of state or local government, then you are usually dealing with a state public works payment bond. A payment bond is required for most, but not all, state, county, and municipal projects."

9-11 WHAT IS A NOTICE OF COMMENCEMENT? Purpose. "The notice of commencement

serves two functions. First, it is a project information source for those who need to know information such as property description property owner, and whether the job has a payment bond. The notice of commencement should contain the essential information about the project that a lienor needs to know in order to comply with the procedure or perfecting lien rights, or private payment bond rights."

"The second function is that the notice of commencement fixes the time when liens recorded under the direct contract for which the notice of commencement was recorded, attach to the title of the property." Not for subdivision improvements. "Note that no notice of commencement is to be recorded for subdivision improvements. Subdivision improvements are defined as that work for the purpose of making the property suitable as the site for the construction improvements." "Once a notice of commencement is recorded, it creates difficulties in obtaining an institutional mortgage because of the attachment of later recorded liens as of the notice of commencement." Duty to record and post notice of commencement. "If there is no construction loan, then the owner has the duty to record the notice of commencement in the public records of the county where the real property being improved before work on the real property begins but not sooner than 90 days prior to starting work at the site. If there is a construction loan, the recording of the notice of commencement is the lender's duty."

9-11 - 9-12 Time to record notice of commencement. "The notice of commencement is to be

recorded before construction starts, but not sooner than 90 days before construction starts."

9-12 Information about payment bond. "Among other things, the notice of commencement

should tell you whether there is a statutory payment bond on the job."



"If there is any bond for the project pursuant to section 713.23 or 713.245 Florida Statutes, a copy is to be attached to the notice of commencement." "If there is a bond attached or if there is a surety indicated on the notice of commencement, unless the owner has made a mistake,you are dealing with a job that has a payment bond." Fixes time for attachment of liens. "The second function of the notice of commencement is to fix the time that liens arising under the prime contract for which the notice of commencement was recorded attach to the title of the improved property (if recorded within the effective period of the Notice of commencement.)" Highlight the example.

9-14 Become familiar with the Notice of Commencement document on this page. 9-15 Effective Period. "A notice of commencement is effective for the period stated therein (at

paragraph 9) for at least one year. If there is no effective period placed in that paragraph, then the notice of commencement is effective for one year from date of recording."

Termination of Notice of Commencement. "The owner has the ability to terminate the effective period of a notice of commencement by recording a notice of termination of notice of commencement." "If a lienor learns that a notice of termination of notice of commencement has been recorded, the lienor should investigate. If payment satisfactory arrangements for payment have not been made, the lienor should strongly consider recording the claim of lien prior to the time that the notice of termination of notice of commencement becomes effective." Amendment of Notice of Commencement. "If there is any error in the notice of commencement, or if a job goes longer than originally anticipated, it would be proper to amend the notice of commencement." WHAT HAPPENS IF THE CONTRACTOR IS TERMINATED AND THE OWNER WISHES TO COMPLETE THE JOB WITH ANOTHER CONTRACTOR? "If the prime contract is terminated and the owner wishes to complete with another contractor, the owner shouldfollow the procedure in Florida Statute 713.07(4). That procedure is: 1) - 3)."

9-16 "Liens recorded within 30 days of the recorded affidavit of abandonment take priority over

any liens recorded for the completion work. Liens arising under the original contractor not recorded within 30 days of the recorded affidavit, but still within 90 days of last work, will be inferior to the liens arising under the completing contractor."

9-17 AM I A LIENOR? Lienor is defined as a) - f)."

"The following list describes the proper lienors: 1. - 6." "One additional requirement for a material supplier is that the supplier furnishes the materials at the site, or for direct delivery to the site. Materials from a supplier sold just for stock, and not for direct delivery to the side are not lienable. On the other hand, materials sold at the counter of the supplier, which are designated for use on a particular site, are lienable if the materials go to that site. Note that a material man selling to another materialman is not a lienor. Note that a sub-sub-subcontractor is not a lienor."

9-18 "Note that the construction lien law language is to be strictly, and not liberally, construed

by the courts, with the exception of the notice to owner and claim of lien documents."



WHAT WORK IS LIENABLE? Improvement to real property. "Remember that lienable work is the furnishing of labor, services or materials for the improvement of real property." "The statutory definitions of "improve" and "improvement" clearly include what one would ordinarily consider construction work on site (i.e., structural work, plumbing, electrical,mechanical, etc.). Work such as lawn maintenance or pool maintenance is not a permanent benefit to real property. Those items are not lienable." "Excavation and demolition are lienable improvements."

9-18-19 MUST I SERVE A NOTICE TO OWNER? "The Construction Lien Law provides a form of

notice to owner. 9-19 "The law also allows a person sending a notice to owner to make two specific additions to

the form: 1) and 2)." NOTICE TO OWNER (Become familiar with this form.) 9-20 Non privity claimants must serve. " — every potential lienor who is not working directly for

the owner must serve the owner with a notice to owner, with the following three exceptions: 1) a laborer, 2) a professional lienor and 3) a sub-division improver. Purpose of the Notice to Owner. "The notice to owner serves two purposes: 1. and 2."

9-20 - 9-21 Time. "If you are not dealing directly with the owner, the owner must receive the notice to

owner, with a copy to every person in chain of contract between your customer and the owner not later than the earliest of the following times: A) - C)."

"If you are in privity of contractor with the owner, the owner does not need to receive a notice that you are working on the real property."

9-21 HOW DO I SERVE THE NOTICE TO OWNER AND OTHER LIEN DOCUMENTS? A.

Actual delivery. "It means that the owner actually receives the document by any method. The most common method of actual delivery is by handling the document to the owner. "The most common proof of delivery is a signed receipt. In some instances the owner may not agree to sign a receipt. In that instance, the person delivering should make a written record of the delivery in order to be able to refresh the person's recollection if the delivering person is called upon to testify as to the actual delivery."

9-22 ―One other concern about serving by actual delivery is that if the corporation is an

individual, it must be delivered to the individual. If the owner is a partnership, one of the partners must receive it. If the owner is a corporation, the notice must be given to an officer, director, managing agent, or business agent."

B. Common Carrier Delivery; Global Express Guaranteed Delivery; or Certified or registered mail with evidence of delivery (return receipt). "Note that the notice must be received, and delivery is NOT complete upon mailing. There are exceptional circumstances that define when delivery is complete upon mailing: 1) and 2)." C. Certified or registered mail or Global Express Guaranteed delivery within first 40 days - bi receipt." Posting at the jobsite. "Some people take a photograph to help prove this method of service."

9-22-23 RELEASES. "A potential lienor will be required to give releases on most, if not every,

job." "Understanding the language in releases is very important."

"For example, a document titled "Full, Final, and Absolute Release of Lien" cannot release lien rights that arise from work done subsequent to the date of the making of the release. The lien law makes unenforceable the release of lien rights in advance of doing the work."


Section/Pg #. Highlight "Another source of confusion is the language in many release forms that says Tor and in consideration of ten dollars ($10) ...' That phrase is most often used to show that something of value was exchanged for the release."

9-23 A. Release through a time certain. "This is the release that releases all lien rights through the date recited in the release." "There are potential issues that should be addressed with the release through time certain. First, be sure that the payment being made actually pays for all work done or materials furnished through the effective date of the release. Common misunderstandings include:"

"1. The payment does not include retainage. The payment does not include pending claims or extras that were performed prior to the effective date of the release." "2. The release says that it releases all lien rights 'through the date hereof.' The person making payment is a little tardy, but calls you to tell you that your payment for the work done two months prior is now ready to be exchanged for a release." " You have just unwittingly given a release of lien rights for the work done between the time of that requisition for which you were paid, and the date that you signed the release." "3. Some lenders and/or owners like to see the amount paid in the release form so that they can track where the money is going."

9-24 B. Release of specific sum. "Note also that someone who receives a Release of Lien

upon Final Payment may believe that the lienor has no further lien rights on that project."

"Understand that there is the freedom to release lien rights in excess of what you are paid, as well as the freedom to pay more than the value of what is released. This is called settlement."

9-25 "The forms that follow are the statutory forms of release found in the Construction Lien Law:" Note the Waiver forms.

9-26 COMMON PROBLEMS WITH RELEASES. "These are the most commonly encountered

problems with releases: I. Release form required in contract. "If that is the case, the release form should be examined and agreed to, just as any other term of the contract."

II. Release to be given prior to payment. "The law presumes (unless otherwise agreed) that payment will be made, and a release given after, or in exchange for payment unless otherwise agreed." "In order to not be faced with chasing down releases, owners and contractors provide in their contracts that the release must be given prior to payment." "The first thing that should be done by the contractor or sub faced with this clause is to try to change it to provide that the release will be exchanged for payment. If this cannot be negotiated, then the contractor or sub should insist that any release given prior to payment is a release that contains an express condition that the release is not valid unless payment is received." Ill. Release given for a bad check. "In order to deal with this potential situation, a lienor may do one of three things: A. - C."

9-26 -9-27 "The claim of lien is the document that is recorded in the public records as notice to the world of the claim of the lienor against the property."

"Notice the following about the claim of lien form: 1) - 9)"



9-27 "The claim of lien must be recorded in the county where the improved property is located not later than 90 days from last work. In the case of someone working under a contractor who has been terminated, the lien must be recorded within 90 days or termination of the contractor, if sooner than 90 days from last work. One should be careful about mailing the claim of lien to the clerk for recording. If you hand deliver the claim of lien to the clerk's counter, the clerk will immediately record it. If you mail the lien in for recording, the clerk may take days to open the mail, depending on staffing. The lien must be recorded by the clerk within 90 days, not just delivered to the clerk for recording within 90 days."

9-28 Highlight the Claim of Lien form. 9-29 Highlight the Checklist for Preparing a Claim of Lien.

SERVE A COPY OF THE CLAIM OF LIEN ON THE OWNER. "When a lienor records a claim of lien, the lienor should serve (see above discussion about serve and service) a copy of the claim of lien on the owner not later than 15 days from recording. The owner can claim defense to the extent the owner suffers damage due to failure to receive the copy of the claim of lien with 15 days of recording."

9-29 - 9-30 HOW LONG DOES A CLAIM OF LIEN LAST? " A claim of lien is effective for one year

from the date on which it is recorded in the public records unless it is released, or unless one of the procedures described below is used to shorten the time."

"Don't wait until the last minute to enforce lien rights." "Filing suit to enforce the lien is the only effective way to make the lien remain effective for a period longer than one year from date of recording."

9-30 "IF YOU RE-RECORD A CLAIM OF LIEN IT WILL NOT EXTEND THE LIFE OF THE

LIEN. THE RE-RECORDED CLAIM OF LIEN IS INVALID AND YOUR LIEN RIGHTS WILL BE LOST IF SUIT IS NOT TIMELY FILED TO ENFORCE THE LIEN. The only way to extend the effective period of a claim of lien is to file suit to enforce it." Notice of Contest of Lien. "THE OWNER CAN SHORTEN THE TIME TO ENFORCE THE CLAIMOF LIEN by recording a Notice of Contest of Lien." "Only the owner or the owner's attorney can sign the Notice of Contest of Lien.' "If the lienor fails to file a lawsuit to enforce the lien within 60 days of the date the clerk of court certifies in the Notice of Contest of Lien that a copy was served on the lienor, lien rights are lost." "The owner is not required to have any basis to contest the lien in order to record a Notice of Contest of Lien.

9-31 Note the Notice of Contest of Lien form.

Twenty Day Summons to Show Cause. "Another procedure that the owner may use to shorten the time to enforce the claim of lien is to file suit challenging the lien using a 'Twenty day summons to show cause. " "The effect is to shorten the effective period of the claim of lien to twenty days after service of the summons, UNLESS the lienor files a counterclaim or separate suit to enforce the lien (or other showing of cause) within twenty days after service of the special summons."

9-32 Note the Civil Action Summons form example.


Section/Pg #. Highlight 9-33 INFORMATION REQUESTS. Request from owner for list of subs and suppliers."The

contractor must, within 10 days after receipt of the owner's written request, furnish to the property owner (or his/her agent) a list of the subcontractors and suppliers who have a direct contract with the contractor as of the date the request is received by the contractor."

Demand for copy of contract. "Any lienor may request a copy of the lienor's contract with the owner or other party upon written demand. An owner also has the right to demand a copy of the contract of an lienor. If the party requesting the contract agrees to pay the costs of reproduction, then a copy should be made available. If the party requesting the copy of the contract does not agree to pay the costs of reproduction, then the party requesting the copy of the contract is only entitled to inspect the contract at 'reasonable times and places." "There is no specific time period for responding to the request for a copy of the contract." "However, a period of thirty days or less would appear to be reasonable in most circumstances."

9-34 "Examples of cases with resulting damages could be: A) - D)."

REQUEST FOR SWORN STATEMENT OF ACCOUNT. "Under the construction lien law, there are three subsections that provide for the furnishing of a statement of account in response to a written request."

9-35 Request for statement of account by owner or any lienor. "However, the knowing and intentional furnishing of a false statement regarding the status of payment to subcontractors, sub-subcontractors or suppliers knowing that the one to whom it is furnished might rely on it and part with payment, is a third degree felony."

Request for sworn statement of account by owner. "The owner may serve a written request for a sworn statement of account from any potential lienor." "A form for the request from the statute is as follows: (Highlight the Request for Sworn Statement of Account form)."

9-36 "A lienor who fails to timely respond to the request, or who furnishes a false or fraudulent statement, may be deprived of his lien rights. A lienor who negligently furnishes inaccurate information may be deprived of a lien to the extent that the owner can show prejudice from the inaccurate information."

"As a potential lienor beware of this request document."

9-37 "The statute says that the contractor must, in any event, give the owner a final contractor's affidavit not later than five days before the contractor files suit to enforce the contractor's lien."

CONTRACTORS FINAL PAYMENT AFFIDAVIT. Purpose. "One purpose of the contractor's final payment affidavit, a/k/a the final contractor's affidavit, is to allow the owner to see what exposure may exist for liens that could be claimed by lienors working under the contractor." "Another purpose of the final contractor's affidavit is to give protection to lienors who may be working on the job, but whose time to serve a notice to owner has not yet expired."


Section/Pg #. Highlight 9-38 "The contractor's final payment affidavit must be delivered to the owner no later than 5

days before suit is filed to enforce the contractor's lien, even if the final payment has not yet become due."

9-39 CIVIL REMEDIES IN THE LIEN LAW. Enforcement/Foreclosure. "The prevailing party in a lien enforcement action is entitled to recover attorney fees. If the lienor recovers on its lien more than was offered prior to suit being filed, usually the lienor may be the prevailing party, although the court has discretion. If the owner obtains a judgment with no liability, or less than was offered prior to suit being filed, usually the owner will be the prevailing party. The word 'usually' is inserted because there are certain legal procedures (e.g., offer of judgment) and court discretion that may impact the general rule."

Retaking materials. "If you are a lienor, have furnished materials to the project and you are not paid for those materials, can you take them back? The answer is yes, if you give full sales credit without restocking charges, and if the materials have not been installed. Once the materials have been installed, you cannot uninstall them to take them back. Once the materials become installed, the materials lose their legal character as personal property and become a part of the real estate." "You cannot use force to breach the peace and take back the materials." Lien against insurance proceeds. "If work is done to repair a building by making improvements to the property, and the repair is then damaged as a result of an insured casualty loss (e.g. fire, hurricane, tornado, property damage), the insurance proceeds are also subject to the lien of the lienor." Lien against improvement where person contracting has no interest in the land. (Highlight the entire paragraph.)

9-40 Fraudulent deprivation of lien rights. "If an owner, or a lienor, by fraud or collusion attempts to deprive or does deprive any lienor of benefits or rights under the lien law by a) and b)." Failure to pay undisputed sums. "If a lienor or owner fails to pay undisputed sums to a lienor where the unpaid lienor has performed all duties under the contract and the lien law so as to be entitled to payment for a period of 30 days ..." Failure to give notice of determination to cease loan advances. "Within five business days of the lender making a final determination prior to the distribution of all loan funds under a construction loan, the lender must serve written notice of that decision on the contractor and all lienors who have served the lender with a copy of a notice to owner." Invasion of designated construction fund proceeds. "This section only applies to a residential project if the project is more than four units." "Where the construction loan designates funds for actual construction costs, the lender may not invade those allocated construction funds in an amount of the lesser of $100,000 or five percent of the construction costs, for other purposes (e.g., interest, loan charges, or any other purpose) without the owner or the lender giving the contractor and any lienor who has served a notice to owner, a written notice of the decision to invade those funds." "If the lender does so invade the construction loan funds without the prior written notice, the lender is liable to the contractor for the actual value of the construction materials and direct labor costs, plus 15% for profit and overhead."

9-41 CRIMINAL REMEDIES. Fraudulent lien. "A person who willfully files a fraudulent lien is

guilty of a felony of the third degree."



Misapplication of construction funds. "This crime is a felony." Furnishing a written statement with false information as to the status of payment to lower tier lienors. "Any person who a) and b)." SATISFACTION OF LIEN. "Once a claim of lien has been recorded and resolved by payment or settlement, the proper document to be given and recorded in the public records is a satisfaction of lien."

9-43 LIEN TRANSFER BONDS. Who may transfer a lien to bond? "Any person having an

interest in the real property upon which the lien is imposed, or any person having an interest under the contract for which the lien is claimed (e.g., for a materialman's lien arising for materials sold to a sub-sub, this would include the owner, the contractor, the subcontractor) may transfer the lien to a bond or cash deposit at the clerk's office."

Effect of lien transfer bond. "The lien transfer bond clears the lien from the title of the property. The transfer of a lien does not impact the effect of the lien, except to transfer the claim for unpaid sums off of the title of the property and on to the cash deposit or transfer bond." "Transferring a lien does nothing to shorten the effective period of the lien. It is common to both transfer a disputed lien to bond, and also to record a notice of contest of lien."

9-44 Use of F.S. 713.23 bond as lien transfer bond. "Unless someone has established a

bonding line with a surety, a surety will typically require that the lien transfer bond be fully collaterized with cash or other security as a condition to the surety writing the bond."

Highlight the Notice of Bond form. "The notice of bond must be verified."

9-45 "Note that the payment bond only secures liens recorded that come under the bonded contract." "If the lien is to be transferred to a cash deposit, the clerk will hold the deposit, as well as charge a fee for so doing."

"The lien transfer bond is conditioned to pay any judgment that may be rendered for the satisfaction of the recorded lien."

Amount of lien transfer bond. "Since 1998, the amount necessary to transfer a lien to either a bond or a cash deposit is the total of A. - C."

9-46 Clerk's certificate. "Once a lien in any amount has been transferred to bond or deposit,

the clerk makes and records a certificate showing the transfer of the lien to the security, and mails a copy of the transfer certificate to the lienor by registered or certified mail at the address given in the claim of lien."

"The state circuit court has the jurisdiction to increase the bond, or lower the bond, based on circumstances that would support an increase or lowering of the bond."

9-48 WHAT IS A PAYMENT BOND? Parties to a payment bond. "There is the Obligee, the

Principal, and the Surety." "These are the payment bond Claimants and lndemnitors." "A payment bond is written for the protection of the obligee."

"The principal in the construction payment bond is typically the contractor or subcontractor who gives the obligee the bond (the protection from the payment claims)." "The surety is the party that guaranties the payment for the bonded contractor (the principal) for the payment of bond claims."


Section/Pg #. Highlight "An indemnitor is a person or firm that has agreed in advance, by signing an indemnity or master surety agreement, to pay any claims and claims handling expenses that the surety may incur." "Claimants are those persons who are either 1) defined in the bond, or 2) if the bond is given pursuant to the terms of a statute, then as stated in the statute."

9-49 Types of Bonds. "There are many different types of bonds. For example, there are bid

bonds, fidelity bonds, performance bonds, payment bonds, lien transfer bonds and maintenance bonds."

"For the most part, payment bonds may be subdivided into bonds for private works, bonds for state/county/municipal public works, and bonds for federal public works. Bonds are either statutory bonds or common law bonds." FEDERAL PUBLIC WORKS PAYMENT BOND, The Miller Act USC §3100. Procedure — Claimants selling to bonded contractor. "The federal Miller Act requires that all parties that are in privity of contract with the contractor must file suit no sooner than 90 days, and not later than 1 year, from the last date that they furnished labor services or materials to the job. No notices are required." Procedure — Claimants not selling directly to bonded contractor. "Claimants who are not in privity of contractor with the contractor (e.g., sub-subcontractors, material suppliers selling to subcontractor, etc.) are required to serve a notice of non-payment on the contractor by any means which provides written, third-party verification of delivery within 90 days from the claimant's last furnishing of labor, services or materials to the job site." Class of claimants. "Claimants on a federal Miller Act bond are not as restricted as those who may make claim under Florida Public Works Bonds."

9-51 Exemptions from requirement of Fla. Stat. 255.05 bond. "On projects for any state,

county, municipal, or other public authority where the contract amount is less than- $100,000 no bond is required."

"Beware. It is important subcontractors and suppliers to know whether there is a payment bond on a public job."

9-52 Preliminary Notice. "Claimants who are not in privity of contract with the contractor (e.g.,

sub-subcontractors or material suppliers to a subcontractor or sub-subcontractor) must first serve a 'notice of intention to look to the bond for protection' on the contractor within 45 days of first furnishing of labor, and/or materials for the prosecution of the work."

9-58 PRIVATE WORKS PAYMENT BONDS. (Highlight first paragraph.) 9-70 Material misstatements of fact. (Highlight the entire paragraph.) 9-72 – 9-74 713.01 Definitions. Highlight following terms and definitions: (6) Contract, (14) Improve,

(18) Lienor, (25) Post or Posting. 9-75 713.02 Types of lienors and exemptions. "(5) Any improvement for which the direct

contract price is $2,500 or less shall be exempt from all other provisions of this part Reason except the provisions of s. 713.05."

713.03 Liens for professional services. Highlight entire paragraph for (2).


Section/Pg #. Highlight 9-77 713.05 Liens of persons in privity. "A contractor may claim a lien for any labor,

services, or materials furnished by another lienor for which he or she is obligated to pay the lienor, regardless of the right of the lienor to claim a lien; ..."

713.06 Liens of persons not in privity; proper payments. "(1) A materialman or laborer ..." "(2) The notice must be served before commencing, or not later than 45 days after commencing

9-80 "5. If the contract is terminated before completion, the contractor shall comply with

subparagraph (d)1." 9-83 (4)(a) " ... the owner or court shall pay or allow such liens in the following order: 1. - 3." 9-86 (c) (Highlight the entire paragraph.) 9-88 713.12 Liens for improving real property under contract with husband or wife on

property of the other or of both. "... within 10 days after learning of such contract, give the contractor and record in the clerk's office, notice of his or her objection thereto."

9-90 "(2) If the improvement described in the notice of commencement is not actually

commenced within 90 days after the recording thereof, such notice is void and of no further effect."

9-92 713.135 Notice of Commencement and application of lien.

"(d) ... If the direct contract is greater than $2,500, the applicant shall file with the issuing authority prior to the first inspection either a certified copy of the recorded notice of commencement or a notarized statement that the notice of commencement has been filed for recording, along with a copy thereof."

9-98 713.165 Request for list of subcontractors and suppliers. "(2) The contractor must

within 10 days after receipt of the property owner's written request, furnish to the property owner or the property owner's agent a list of subcontractors and suppliers who have a contract with the contractor as of the date the request is received by the contractor."

9-101 713.21 Discharge of lien. (4) "Upon filing a complaint therefor for any interested party

the clerk shall issue a summons to the lienor to show cause within 20 days why his or her lien should not be enforced by action or vacated and canceled of record."

713.22 Duration of lien. "(1) A lien provided by this part does not continue for a longer period than 1 year after the claim of lien has been recorded or 1 year after the recording of an amended claim of lien that shows a later date of final furnishing of labor, services, or materials, unless within that time an action to enforce the lien is commenced in a court of competent jurisdiction." Highlight the entire paragraph for (2). NOTICE OF CONTEST OF LIEN. "The lien of any lienor upon whom such notice is served and who fails to institute a suit to enforce his or her lien within 60 days after service of such notice shall be extinguished automatically."

9-104 (2) "Record notice of the transfer shall be effected by the contractor, or any person

having an interest in the property against which the claim of lien has been asserted, by recording in the clerk's office a notice, with the bond attached, in substantially the following form:" Note the NOTICE OF BOND form.


Section/Pg #. Highlight 9-106 "(b) Filing in the clerk's office a bond executed as surety by a surety insurer licensed to

do business in this state, either to be in an amount equal to the amount demanded in such claim of lien, plus interest thereon at the legal rate for 3 years, plus $1,000 or 25 percent of the amount demanded in the claim of lien, whichever is greater, to apply on any attorney's fees and court costs that may be taxed in any proceeding to enforce said lien."

9-113 713.345 Moneys received for real property improvements; penalty for

misapplication. "(b) Any person who knowingly and intentionally fails to comply with paragraph (a) is guilty of misapplication of construction funds, punishable as follows: 1. and 2."

9-116 – 9-117 713.35 Making or furnishing false statements. Highlight paragraph through the end of

the sentence ending with "s. 775.082 or s. 775.083." 10-5 Estimating and Bidding: Estimate - Bid Process:

10-6 Figure 1 - Estimate Bid Process 10-6 Specifications: "In either case, the courts have held that the project specifications are

the guiding document and take precedence over the plans or other project documents." "When differences between the plans and specifications are found, they should be addressed in a formal document called a "Request for Information" (RFI)."

10-7 -10-8 "This method divides the specifications into 50 specific divisions (division 00 Procurement

and Contracting Requirements and 49 Technical Divisions) to provide a standard reference and filing numbers for bidding and contract forms as shown below: Note the

CSI Masterformat. "Referring to the CSI MASTERFORMAT DIVISION form shown in

Figure 2, we can see that the major divisions including Concrete Division 03 is further subdivided into major/specific work elements with the division which are called the CSI Broadscope Category."

"Each of the CSI Mediumscope Categories is assigned a unique identification number which aids in filing and locating documents related to the project."

10-8 "The CSI MASTERFORMAT is published by the American Institute of Architects (AIA)

and is available from the Construction Specifications Institute (CSI) at www.CSINet.org/MasterFormat and other project estimating publications."

10-9 Division 00 - Procurement and Contracting Requirements: General Clauses and

Conditions: "The first section of the procurement and Requirements Division is called the General Clauses and Conditions section, and it specifies the legal requirements of the project. An index to this section would typically include the following headings: (6 bullets)."

Instructions to Bidders: "This section provides the prime contractor and subcontractor with a brief description of the project, its location and how the project is to be bid, i.e. lump sum, cost of the work plus a fee, unit price and/or design/build." Proposal: "The following conditions are, in many cases, paramount for acceptance of a proposal: 1. - 4."

10-10 Agreement: "The agreement is the legally binding ratification of the proposal. The

signing of an agreement between prime contractor and owner or between subcontractor and prime contractor is a legal and binding contract between the parties."



General Conditions: "The following are typical items included under General Conditions heading of the General Clauses and Conditions section under the CSI-MASTERFORMAT:" (Highlight the following headings and definitions: "General notes," "Definitions," "Contract Documents," "Insurance," "Workmanship and materials," "Substitutions," "Shop drawings," "Payments," "Coordination of Work," "Correction of Work," "Guarantee," "Compliance with all laws and regulations," "Others."

10-11 "The following list outlines the items normally contained in the supplementary general

conditions, ..." Highlight all of the items following this paragraph. 10-12 Methods of Estimating: "There are several methods of estimating a construction

project."

"The square footage method is based on a cost per square foot." "This method is not recommended for prime or lump sum contracts." "The detailed survey or piece method is an accurate estimating method that consists of listing all materials and labor needed for an element of work or project." "The unit price method consists of determining the cost of each unit of construction such as doors, concrete slab, flooring, form work, just as in the piece method." "Approximate estimates. (guesstimate) is less detailed and specific than the detailed survey or unit price approach." Types of Estimates: "1. Preliminary Estimates are made from limited information ..." "2. Detailed Estimates are precise statements of quantities of materials ..." " 3. Activity Estimates consist of a listing of all steps required to construct a given project ... "

10-13 4. Material Estimates consist of a listing and description of the various materials and the

quantities required to construct a given unit of work or project." "A material estimate is sometimes referred to as a Bill of Material (BM) or a Material Take Off (MTO)."

5. Equipment Estimates consist of a listing of the various types of equipment, the amount of time and the number of pieces required to construct a given unit of work or project." 6. Manpower Estimates consist of a listing of direct labor man-days required to complete the various activities of a specific project."

10-13 - 10-14 Estimating Guidelines: "The following suggestions are made to enable the estimator to

perform an estimate in a logical, easy to check and thorough manner if performed using estimating program or electronic spreadsheet: 1. - 16."

10-14 Estimating Controls: "Based on Built Right's general cost experience for different types

of construction, the rule-of-thumb checks can be used to rough estimate the total cost and prepare square footage, unit price and approximate estimates or bids."

"Another advantage of the pre-formatted account number organization is that the account numbers can also provide a basis for cost accounting codes."

10-23 Activity Estimates and Quantity Estimates of Materials: "Activity estimates provide a

basis for preparing estimates of material, equipment and manpower requirements."

Procedure: "The following procedure has been proven with use and the estimator will find that it produces satisfactory results. 1. - 3."



Material Estimates: "For example, the purchasing department or project manager, may have some doubts about the availability of materials, and requests that an estimate be prepared listing material quantities required to complete the project. This estimate is then compared with inventory to determine any shortages." "1. Estimating Work Sheet Figure 9, when completed will show the various individual activities for a project with a listing of the required materials."

10-24 "2. Material Take-Off Sheet (MTO), Figure -10, when completed will show in addition to

the information listed above, the suggested vendor or source, supply status, part number, and required delivery date."

"3. The Bill of Materials (BM) is similar in content to the Materials Take-Off Sheet with information presented in a format suitable for electronic formatting." Long Lead Items: "Long lead items are those which are not readily available through the normal purchasing system, and will require special attention by the estimator to ensure delivery at the required time."

10-27 Factors Affecting Production: "Estimators must be familiar with the following definitions

and how they affect production."

" 1. "The estimator should not make the mistake of using the speed limit as the average speed at which the equipment will be operated." "2. The type of material to be handled has a definite effect on the amount of time required." "3. Safety factors limit the amount of work which can be produced with a machine and therefore they must be considered as a production factor." "... for reasons of safety the maximum lifting capacity of that particular crane may have been limited to 85 percent of the 'Okay' rating." "4. The experience of the operator must be considered when estimating equipment production." "5. The Age and condition of equipment must be considered in estimating the number of days required to perform work." "6. Completion time affects production, if crews must work long hours daily, or if the work must be performed under crowded conditions in order to complete the project within the allotted time." "7. Climate has a considerable effect on production of equipment working outside."

10-28 "The activity estimate must be examined and all activities requiring equipment listed."

Highlight items 1. - 6. 10-28 Labor Estimates: "There are two types of labor estimates; preliminary manpower

estimates and detailed manpower estimates." "1. Preliminary manpower estimates are used to establish costs for budget purposes and to project manpower requirements."

"2.Detailed manpower estimates are used to determine the manpower requirements for the construction of a given project and the total direct labor requirements for the project."

10-30 Factors Affecting Production: "1. Weather conditions will have an effect on the number

of man-hours required to perform a task."



"2. The skill and experience of the craftsmen who will be assigned to the work should be considered when deciding the man-hour range to use." "3. The time allotted for completion of a project will have a definite bearing on the number of workers assigned to perform the work."

10-31 "4. The size of the crew can affect production in another way."

"5. Site accessibility can affect labor requirements for a project." "6. The type of material to be handled may affect the number of man-days required for a project." "7. The type of equipment available often has a considerable effect on the amount of labor required to perform a certain task." Production Efficiency Guide Chart and Graph: "The Production Efficiency Guide Chart,

Figure 12, lists eight factors (production elements) that directly affect production."

"The estimator evaluates each production element at some specific percentage between 25 and 100 according to the estimator's analysis of the foreseen conditions. "

10-32 Figure 12 - Production Efficiency Guide Chart 10-33 How to Use the Labor Estimating Tables: "As used herein, one man-day equals eight

man-hours of direct labor. Man-day figures do not include overhead items such as absences, material delays, weather, etc."

10-34 Construction Contracts: "Contracts need not be in writing to be valid, however, as a

practical matter, they may need to be in writing to be enforceable."

"The handwritten provision prevails over the typed provision, and the typed provision prevails over the printed provision. In the event there is an inconsistency where numbers are expressed in words and figures, the words govern."

10-34 "One division includes those contracts ..." (Highlight this entire paragraph.)

"The lumpsum contract is one in which the contractor agrees to carry out a stipulated job in exchange for a fixed sum of money." "Contracts of the cost-plus variety are used where, in the judgment of the owner and/or contractor, a fixed-sum contract is undesirable or inappropriate."

10-35 "The G.M.P. or Guaranteed Maximum Price contract is of the cost-plus variety."

"The advantage to this form of contracting is that it puts the owner and contractor on the same team." "Savings to the G.M.P. are usually shared between the owner and contractor." Contract Cost Breakdown: "This form of unbalancing a bid for billing purposes is a common practice in the construction industry and can aid the Contractor in financing the project."


Section/Pg #. Highlight Figure 15 - Contract Cost Breakdown. (Reference definition of "Front End Loading" on page 10-74.)

10-36 Sample Job Cost Records: "A typically successful contractor's approach to control or

job progress would include: (a) - (f)." Figure 16 - Control of Job Progress and Cost Flowchart.

10-37 Mechanics of Cost Accounting - Accumulation: "Generally, costs are not accumulated

..." (Highlight the entire paragraph.)

"At a minimum, the cost accounting records ..." (Highlight the entire paragraph.) "The summary account usually is updated on a monthly basis, but it can also be updated on a weekly or even on a daily basis."

10-38 Project Administration: "Responsibility for job progress typically lies with a project

engineer of field superintendent."

"The project engineer or field superintendent completes the Job Status Report (Figure 20) for each project each month, indicating the percentage completed by each major construction activity."

10-54 Sub-Contractors: "Various local and national surveys indicate that many general

contractors subcontract approximately 50% of the work. When you add to this the additional percentage of total cost represented by material purchases, 50% to 70% of total job costs are generally included in the subcontract or purchase area."

"The responsibility for the timing and coordinating of subcontract work and material delivery normally should rest with the field superintendent."

10-54 ―This report is prepared weekly by the field superintendent and lists major phases of

construction and includes an estimated starting date for work (not yet started), a scheduled completion date, the percent of work completed and an adjusted completion date for work which has been started, if applicable."

"Subcontractor requisitions should not be processed without the field superintendent's approval of the percentage of work completed and invoiced." Figure 25 - Sub-Contractor Progress Report.

10-54 Change Orders: "The change order or equitable adjustment many times presents more

problems for the contractor than any other administration issue." 10-57 Network Analysis Technique: "Critical Path Analysis (CPA), Critical Path Method

(CPM) and Project Evaluation and Review Technique (PERT) are representative of numerous titles." "For this reason the generic title covering the various systems is 'NETWORK ANALYSIS."

Advantages of Network Analysis: 1. - 13.

10-58 Disadvantages of Network Analysis: "The only real disadvantage of Network Analysis

as a planning tool is that it is a tedious and exacting task, if attempted manually."

Project Planning: "The basic ground rules in analyzing a project are that planning and scheduling are two distinct separate operations and that planning must always precede scheduling."


Section/Pg #. Highlight "I. Preliminary: 1. - 3. and NOTE 1" "II. Detailed: 1. - 14. and NOTE 1"

10-59 Developing the Activity List: "A useful guideline is to ask three questions about any particular activity in the network (it must be emphasized that these are simply useful pointers, not infallible rules). 1. - 3."

Network Construction: "A 'network' is used to represent any sequencing of priorities among the activities which constitute a project. This sequencing is determining by two types of dependency: 1. and 2." "In construction networks there are two types of diagramming techniques that can be applied, Precedence Diagramming and Traditional Arrow Diagramming."

10-60 Representation of Activities and Events: "An activity in a Precedence Diagram is represented by a rectangular box ..." (Highlight entire paragraph.)

"The left side of the activity box represents the start of the activity, and the right side represents the completion. Lines linking the boxes are called 'connectors' and the general direction of flow is evident in the connectors themselves, and arrowheads are not necessary." "The network may also contain certain precise, definable points in time called 'events.'" "Events have no duration and are represented as oval boxes on a network."

10-61 Representing Parallel Activities: "For instance, it is possible to start laying a long pipeline before the excavation is completed. This type of overlap is known as a 'lead.' It is possible to start a job independently, but not to complete it before another is completed. This type of overlap is known as a 'lag.' The letter 'p' on the connector indicates a lead on the start of the preceding activity, and an 'f a lag on the finish of the following activity."

"The indication of the amount and type of delay, lead or lag is generally referred as a 'lag factor."

10-62 Direct Linking Using an Event: "When the number of common preceding and succeeding activities in a particular complex is large, as in Figure 32, a 'dummy event' or 'focal activity' of zero duration may be introduced to simplify the network."

Figure 32 Multiple Predecessors and successors (Direct Linking); Figure 33 Multiple Predecessors and Successors (Using Dummy Collector).

10-63 Project Schedules: "One of the first tasks which must be accomplished by the contractor after the awarding of a contract is a project schedule which is usually prepared by the Project Manager."

"In order to provide adequate control, the project schedule should be formally reviewed and updated at least once every 30 days. Progress should be posted at least weekly."

Scheduling Guidelines: "In order to decrease the time required to develop a Critical Path Schedule, the following steps should be followed: Step 1. and Step 2.

10-64 "The Project Manager will solicit the subcontractors' input in developing the schedule."

"In order to eliminate as many conflicts as possible, the proposed project schedule should be reviewed with all subcontractors, major material vendors and specialty subcontractors during the preconstruction conference."



Short Term Schedules: "The short term schedule is a detailed explanation of the subsequent two weeks of construction activities." "The superintendent, the individual charged with coordination of the day-to-day activities, should take the primary role in developing the short term schedule."

10-65 Change Orders: "A change in the contractor's scope of work results in the issuance of a

change order. Change and extra work can be initiated by the architect/owner, their representative or the contractor's requests for changes can be initiated by the subcontractor, vendor or contractor."

"The owner or owner's representative has authority to issue changes to the contract." Subcontractor Change Orders: "Changes initiated by subcontractors and vendors can usually be classified as one of the following: 1. - 3."

10-67 Back Charge Preparation and Control: "When a contractor has to perform extra work

for a subcontractor or material vendor it will proceed to recover the cost in the form of a back charge."

Subcontracts: "Typical trouble areas are as follows: 1. - 8." "The following subcontract documents should be submitted to and approved by the contractor prior to the subcontractor commencing its work: 1. - 3."

10-68 Job Site Inspections and Visits: "A pre-construction meeting should be held with each

subcontractor involving the project manager and superintendent prior to the subcontractor commencing with the work."

"A weekly job site meeting should be held with all subcontractors at least once per week or more often if necessary." Subcontract Bids: Commitment Authority: "The purpose of commitment authority is to designate the individuals authorized to execute contracts, subcontract agreements, purchase order documents and change order documents." "The Project Manager in concert with the Estimating and/or Purchasing Department is responsible for negotiating the terms and conditions of such documents." "Generally, the President or Authorized Vice President is responsible for executing all Subcontract Agreements." Subcontractor Defaults: "It is the responsibility of the project manager to notify a subcontractor and/or vendor when it is in default of any provision of the subcontract agreement, A standard subcontract agreement could have the following notification clauses: Article A."

10-69 ―Article B - Article D." "If the subcontractor fails to correct the default after being properly

notified in writing and it is determined that it is in the contractor's best interest to terminate the agreement, then the Notice of Termination must be sent to the subcontractor and the subcontractor's bonding company."

"Once the subcontractor is officially terminated, the subcontractor's equipment and materials should be left on the site until the subcontractor's work is completed."



Submittal and Shop Drawings: "The expediting and processing of all submittals is the responsibility of the project manager and on larger project, the authority may be delegated to the project engineer."

10-70 Monthly Indicated Outcome Report: "An effective indication of a project's progress is

the Monthly Indicated Outcome Report."

"Accounting is usually responsible for preparing the work copy while the project manager is responsible for maintaining, updating and submitting the Monthly Indicated Outcome Report."

"Upon receipt of the Monthly Indicated Outcome Report, the cost accountant should verify that the cost-to-date figures are in agreement with the project accounting records."

Weekly Labor Distribution Reports: "This report provides a weekly accounting of both cost of labor expended in the current week and total to date. The project accountant should prepare the report with the labor hours and cost when provided by the project superintendent." "The project manager provides quantities for work in place and should review the weekly labor distribution with the superintendent weekly." Weekly Labor Distribution Analysis: "At or near the completion of a project, the project manager or his designee is responsible for the preparation and distribution of the in-house punch list." "The following documents should be obtained by the project manager: 1. - 4."

10-71 Project Management and Supervisors: "As a contractor there are three factors that

affect the cost of a project. They are labor, materials and equipment. These three areas comprise 85% to 90% of the cost of all construction activity. The job supervisor has the greatest (positive or negative) effect on these three areas."

"Management's affect on direct construction costs are approximately 10% to 20% and 80% to 90% on indirect costs." "There are three key skills that the field supervisor must have and be able to use efficiently: 1. - 3."

10-71 - 10-72 Note the list of responsibilities for key personnel at the project such as: Project Manager,

Project Superintendent, Project Engineer, and Project Accountant. (You should be familiar with where to locate these different responsibilities. There may be at least 1 or 2 questions in the tests for both day 1 and 2.)

10-73 Terms-Definitions: Note the terms and definitions of the following: Bid shopping, Front

end loading, and Liquidated damages. 10-79 What Will Change, and What Will Remain The Same. 10-93 "It is important that project managers be aware of all environmental requirements that

may impact their activities so that they assure compliance."

"Project managers and construction supervisors should apply the same management practices to environmental compliance that they use for other regulatory requirements such as OSHA and building codes."



Environmental Compliance Management: Contractor/Owner Environmental Responsibility: "Government regulations do not clearly assign environmental compliance responsibilities to the Owner or the Contractor. Both can be held liable for failure to comply; ..." Record Keeping and Reporting: "Failure to keep organized complete records or to submit a report by the due date is an easy violation for an inspector to spot." "Be sure you: (3 bullets)." "Typical records include, but are not limited to: (6 bullets)." House Keeping: "Keep the project site neat and orderly and maintain all environmentally related equipment and storage devices." "Try to eliminate the following types of situations: (4 bullets)." Emergency Response Plans: "Every work site, including your company back lot, should have an emergency response plan. The plan should address both worker safety and environmental protection."

10-94 Informing and Training Employees: "Many companies use some of these ideas for

informing employees: (4 bullets)."

Costs of Environmental Non-Compliance: "Monetary costs include: (6 bullets)." "Liability costs include: (5 bullets)." "Reputation costs include: (4 bullets.)" Dealing with Environmental Regulators: "Regulators can be an excellent source of information about environmental compliance." "Environmental inspections will be usually unannounced."

10-95 Pollution Prevention: "Steps to reduce your compliance problems include: (3 bullets)." 10-96 Petroleum Storage Tanks: "Aboveground storage tanks with a capacity to store in

excess of 550 gallons must be registered with FDEP within 30 days of putting product into the tank."

"New aboveground tank systems, including secondary containment, overfill protection, dispenser liners and integral piping shall be installed in accordance with FDEP Rule 62-761.500, F.A.C." "Underground storage tanks with a capacity to store in excess of 110 gallons must be registered with FDEP within 30 days of putting product into the tank. The contractor installing the underground storage tank system or removing an underground storage tank or associated piping must have a Pollutant Storage System Contractor license certified by the Department of Business and Professional Regulation." "A verbal or written notice shall be provided to the County of FDEP at least 30 days prior to installation or upgrading the underground storage tank system; and within 48 hours of initiating installation or upgrading the storage tank system to confirm the date and time of the scheduled activities.


Section/Pg #. Highlight Water Discharges: "The State of Florida has adopted specific Rules (Administrative Codes) requiring the notification of the intent to discharge produced water to Waters of the State." "Waters of the State include both surface waters and ground waters." "Each of the activities listed above have specific permitting requirements and the local district office of the FDEP should be contacted prior to initiating any of these activities." Accidental Discharges From Broken Or Severed Industrial Or Domestic Sewer Lines: "Notifications: Florida Administrative Code 62-604.550 requires that notification be made to the Florida Department of Environmental Protection of "all" abnormal events within 24 hours. The FDEP may require written notification within 72 hours, including the events or circumstances surrounding the release. Immediate notification is the best policy. Response should include: 1. - 3."

10-97 Solid Waste Management: (4 bullets.)

Asbestos: "EPA asbestos regulations apply to the demolition or renovation of commercial, industrial, and publicly owned buildings and residential structures with more than four dwelling units. The regulations require the following: (4 bullets)."

"Contact your nearest FDEP office for additional information or copies of the notification form."

Lead Based Paint: "Test (TCLP) any paint to be removed for the presence of lead. If the paint contains more than 5.0 mg/I (ppm) of lead it must be handled as a hazardous waste." "Workers removing lead paint must have specific training in lead paint removal and be in a medical monitoring program." Refrigerants: "Cooling system refrigerants, frequently referred to as 'Freon', are regulated to protect stratospheric ozone."

10-97 Open Burning: "Florida Statutes prohibit open burning by commercial operations unless

the Florida Department of Environmental Regulation has determined there is no other feasible means of disposal."

10-97 - 10-98 "Unconfined Emissions of Particular Matter: "Reasonable precautions include, but are not limited to: (5 bullets)."

10-98 Wetlands: "Unless specifically exempted, dredging, filling, construction, or stormwater

treatment activities conducted in, or over waters of the United States or waters of the State, including wetland, may require a permit or other authorization from the Federal government and the State of Florida. The Florida Department of Environmental Protection (FDEP) is the primary application agency for the State. The U.S. Army Corps of Engineers (Corps) is the permitting agency for the Federal governmental (except for bridges, causeways and effluent discharges)."

Stormwater Management and Erosion Control: "Any construction that creates a new stormwater discharge (e.g., buildings,parking, roads, etc.) will require a state stormwater permit. The application must be submitted at least 30 days before construction begins. The application should include (4 bullets)." "Erosion control during the construction project is essential to prevent sediment and other pollutants from reaching the waters of the state through storm drains and direct run-off. Best Management Practices include, but are not limited to: (5 bullets)."