Exam Cheat Sheet · Quick Reference

Connecticut Business and Law Exam

Connecticut  ·  PSI Services Contractor

Verified, not estimated. Every figure below is drawn from the official exam structure we maintain — question counts, passing standard and topic weighting. Practice questions are grounded in the source law with statute citations. We omit any figure we can't verify rather than guess at it.
Total questions
50
Passing score
70%
Exam time
120 min
Administered by
PSI Services Contractor
Format
Reference materials allowed

Connecticut State Portion 50 questions

Licensing 5 Q · 10%
Purpose and scope of contractor licensing in ConnecticutOccupational and Professional Licensing Division structure and administered boardsHome improvement contractor registration requirements, exemptions, and application processNew home construction contractor registration and certificate requirementsLicense types for trade contractors (electrical, plumbing, HVAC, fire sprinkler, elevator, and specialty trades)Licensee misconduct, disciplinary actions, and grounds for suspension or revocationHome Improvement Guaranty Fund and New Home Construction Guaranty Fund operation and consumer claimsAdvertising and display requirements for registration and license numbers
Estimating and Bidding 7 Q · 14%
Lien Law 2 Q · 4%
Definition and purpose of a mechanics' lienWho is entitled to file a mechanics' lien90-day deadline to file a certificate of lienRequired contents of the certificate of lienNotice of Intent requirements for subcontractors and suppliersServing requirements for certificate of lien and notice of intentOne-year time limitation and lien foreclosure processOwner's ability to bond around a lien
Financial Management 4 Q · 8%
Tax Laws 5 Q · 10%
Connecticut state tax obligations: income, sales and use, business entity, unemployment, and corporation franchise taxes
Labor Laws 5 Q · 10%
Connecticut wage and hour laws including pay frequency, termination pay, and wage withholdingWorkers' compensation coverage requirements and fraud provisionsRequired workplace postings under federal and Connecticut law
Project Management 5 Q · 10%
Contracts 6 Q · 12%
Business Organization 2 Q · 4%
C corporation formation, double taxation, and Connecticut registration requirementsLimited liability company (LLC) structure, taxation, and Connecticut registrationBusiness name selection and registration with the Connecticut Secretary of State
Risk Management 4 Q · 8%
Employment-related insurance (workers' compensation, unemployment, social security)Federal and Connecticut state bonding laws (Miller Act, Little Miller Act)
Environmental and Safety 5 Q · 10%
Connecticut Department of Labor Occupational Safety and Health Division (CONN-OSHA) role and jurisdictionConnecticut Department of Environmental Protection requirements and permits for contractors

Key Distinctions

Bid shoppingvsBid peddling

Bid shopping is the general contractor approaching subcontractors other than those who submitted bids to seek a lower offer than the original quotes, while bid peddling is a subcontractor approaching the general contractor after the project was awarded with the intent of lowering the price it submitted on bid day.

NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Peddling section
Bid riggingvsBid shopping / bid peddling

Bid rigging is a form of collusion in which contractors coordinate their bids to fix the award outcome, whereas bid shopping (GC seeking lower sub bids after bids are in) and bid peddling (sub lowering its price after award) involve price-cutting rather than coordinated collusion.

NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Rigging section
MediationvsArbitration

In mediation an independent third-party mediator only facilitates dialogue and the parties themselves set the conditions of any agreement, while in arbitration the arbitrator acts as a judge and renders a decision (arbitral award) by which all parties are legally bound.

NASCLA Contractors Guide, Contract Management chapter — Alternative Dispute Resolution section
Mediation/arbitrationvsCollaborative law

Mediation and arbitration use a neutral third party, but collaborative law is a facilitative process with no neutral mediator or arbitrator in which parties use their advocates, most often lawyers, to negotiate a mutually beneficial result.

NASCLA Contractors Guide, Contract Management chapter — Alternative Dispute Resolution section
Material breachvsImmaterial (partial) breach

A material breach is a serious violation (e.g., contractor refuses to perform or owner refuses to pay) that may void the contract and will most likely end in litigation, while an immaterial or partial breach usually does not terminate the contract and the injured party may only sue for the value of the damages.

NASCLA Contractors Guide, Contract Management chapter — Breach of Contract section
Liquidated damagesvsActual damages

These are mutually exclusive remedies — an owner who sues for liquidated damages (e.g., $500/day × 20 days = $10,000) cannot also sue for actual damages.

NASCLA Contractors Guide, Contract Management chapter — Breach of Contract section
All-risk builders' risk insurancevsNamed peril builders' risk insurance

All-risk covers direct loss by those perils not specifically excluded by the policy (almost all risks), while named peril has narrower coverage and specifies which perils are covered, such as fire and lightning.

NASCLA Contractors Guide, Managing Risk chapter — Insurance section
Quantity take-off methodvsUnit price method

The quantity take-off method individually estimates units of materials and labor for each task (generally the most accurate), while the unit price method bundles all cost factors — labor, materials, equipment, and subcontractors — into a single price for the entire task.

NASCLA Contractors Guide, Bidding and Estimating chapter — Quantity Take-off section
Project overhead costsvsCompany overhead costs

Project overhead includes bonds, temporary storage, temporary office, security guard, utilities, dumpsters, and portable toilets (typically 5–10 percent of the total bid), while company overhead includes office rent, accounting fees, and legal fees.

NASCLA Contractors Guide, Bidding and Estimating chapter — Add Project Overhead section
Project equipment (direct cost)vsSmall tools and pickup trucks (indirect cost)

Small tools and pickup trucks are indirect costs figured into project overhead rather than listed as direct project equipment costs in the estimate.

NASCLA Contractors Guide, Bidding and Estimating chapter — Determining Estimated Costs section
Leasing equipmentvsPurchasing equipment

Leasing offers no down payment, lower payments spread over a longer period, lease payments deductible as operating expenses, and return of obsolete equipment, but purchasing usually costs less in the long run and provides ownership/salvage value (leases generally cannot be cancelled).

NASCLA Contractors Guide, Bidding and Estimating chapter — Determining Estimated Costs section
AllowancevsContingency

An allowance covers items not specified in the plans (carpeting, fixtures, lighting) and represents the owner's budget for those items, while a contingency percentage protects the contractor if an unanticipated problem or condition arises and is based on the project's risk level.

NASCLA Contractors Guide, Bidding and Estimating chapter — Add Allowances section
Conceptual estimatevsContractor's estimate

A conceptual estimate is generally prepared by the architect using cost models from previous projects, while the contractor may arrive at a much different cost because of the project's unique characteristics.

NASCLA Contractors Guide, Bidding and Estimating chapter — Other Methods of Estimating section

Key Terms

Addendum NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
The document issued when changes are made to a bid package before it is due; it becomes part of the bid documents and, ultimately, part of the contract when awarded.
Unresponsive bidder NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
A bidder can be found 'unresponsive' if information in the bid package is incorrectly submitted or omitted altogether.
Supplements (bid package) NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
Items important to the overall bid process, such as a property survey and soil analysis, distinguished from bid forms and bid instructions.
Pre-bid meeting NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
A meeting scheduled especially for larger projects at which project specifications and any changes to the bid package are discussed.
Preliminary estimate NASCLA Contractors Guide, Bidding and Estimating chapter — Preliminary Estimates section
A risky practice of quoting a price to a customer before accurate calculations can be made — quoting too high may lose the bid and quoting too low may disappoint the customer.
MasterFormat NASCLA Contractors Guide, Bidding and Estimating chapter — Estimating Checklist section
A classification system published by the Construction Specifications Institute that groups numbers and job tasks by major construction activities, recommended as an estimating checklist.
Cost code system (job cost recording) NASCLA Contractors Guide, Bidding and Estimating chapter — Job Cost Recording System section
A three-part code made of a project number, an activity classification code, and a distribution code, where the distribution code identifies material (M), labor (L), equipment (E), or project overhead (P); pairing codes lets estimated costs be compared to actual costs.
Project number (coding convention) NASCLA Contractors Guide, Bidding and Estimating chapter — Job Cost Recording System section
A code made of the project type, the year started, and the sequential project number — e.g., the third remodel started in 2022 is R-22-03.
Project manual NASCLA Contractors Guide, Contract Management chapter — Contract Documents and Project Manual section
A central location for bid documents, contract provisions, technical specifications, and addenda.
Unit-price contract NASCLA Contractors Guide, Contract Management chapter — Unit-Price Contract section
A contract used when the extent of work cannot be fully determined in advance, in which a price per unit is calculated for each item and the contractor is paid according to the actual quantities used.
Indemnification clause NASCLA Contractors Guide, Contract Management chapter — Provisions to Limit Risk section
A contract provision that shifts payment or liability for losses or damages incurred by a third party from the indemnified party to another party; it must be carefully examined to ensure proper liability distribution between contractor and owner.
Retainage NASCLA Contractors Guide, Scheduling and Project Management chapter — Progress Payments section
An amount (commonly 10 percent) withheld from progress payments and released to the contractor after all final approvals are obtained at the end of the project.
Equipment floater policy NASCLA Contractors Guide, Managing Risk chapter — Equipment Floater Policy section
A type of inland marine insurance covering direct physical loss to tools and equipment while stored on premises, in transit, or at temporary locations or jobsites.
Workweek (FLSA) NASCLA Contractors Guide, Employee Management chapter — Fair Labor Standards Act (FLSA) section
Under the Fair Labor Standards Act, a workweek is a period of 168 hours during seven consecutive 24-hour periods.
Home improvement contractor registration threshold (CGS Sec. 20-419) NASCLA Contractors Guide, Connecticut (6th ed.), Appendix K, Page K-2 (CGS Sec. 20-419)
CGS Sec. 20-419(3) excludes from 'contractor' a person whose total price of all home improvement contracts with all customers does not exceed one thousand dollars during any twelve consecutive months; the $200 figure in Sec. 20-419(4) only defines what work counts as a 'home improvement.'
Lead-based paint non-compliance penalty NASCLA Contractors Guide, Jobsite Safety and Environmental Factors chapter — Lead PRE section
Non-compliance with lead regulations carries substantial fines of up to $37,500 per day for each violation, plus criminal penalties of imprisonment for up to one year for willful or intentional violations.
OSHA Form 301 NASCLA Contractors Guide, Jobsite Safety and Environmental Factors chapter — OSHA Recordkeeping section
An individual incident report giving added detail about each specific recordable injury or illness; an alternative form such as an insurance or workers' compensation form providing the same details may be substituted.
Federal Unemployment Tax (FUTA) NASCLA Contractors Guide, Tax Basics chapter — Federal Unemployment Tax (FUTA) section
A tax paid solely by the employer (not withheld from employees) and reported on Form 940, for which employers who pay state unemployment tax on a timely basis receive an offset credit; deposits under $500 may be carried forward to the next quarter.
Status report NASCLA Contractors Guide, Scheduling and Project Management chapter — Status Reports section
A report summarizing project highlights by addressing items completed, items in progress, and outstanding items, used to communicate periodically with the customer, managers, subcontractors, and suppliers.
S Corporation shareholder limit NASCLA Contractors Guide, Choosing Your Business Structure chapter — S Corporations section
An S Corporation may have no more than 100 shareholders who are citizens or legal residents of the U.S.

Formulas to Know

Labor cost per task (quantity take-off method)Required Labor Hours per Task × Labor Rate = Labor Cost per Task (hours spent planning and scheduling must also be figured into labor cost)
Total material cost per unitPrice per Unit × Number of Units Needed = Total Material Unit Cost (obtain at least three supplier bids)
Owned-equipment unit cost and project equipment costTotal Yearly Cost of Equipment ÷ Estimated Hours of Use per Year = Unit Cost per Hour; then Unit Cost per Hour × Project Hours = Project Equipment Cost. Examples: $12,000 ÷ 600 hrs = $20/hr; $30,000 ÷ 1,000 hrs = $30/hr, and $30 × 40 hrs = $1,200.
Bid price after adding overheadDirect Costs ÷ (1 − Total Overhead %) = Bid Price. Example: project overhead 9% + company overhead 11% = 20% total, so direct costs are 80% of the bid; $100,000 ÷ 0.80 = $125,000.
Percentage of completion and cumulative earningsProject Costs Incurred ÷ Total Estimated Costs = % Complete; % Complete × Contract Amount = Cumulative Earnings. Example: $80,000 ÷ $160,000 = 50%; 50% × $200,000 = $100,000.
Net pay (payroll)Net Pay = Gross Pay − Taxes & Deductions. Example: $3,200 − ($384 + $198.40 + $46.40 + $160 + $96) = $2,315.20.
Profitability ratio (profit margin)Net Income ÷ Revenues = Profit Margin. Example: $46,300 ÷ $545,600 ≈ 8.5%. The higher the percentage, the more profitably the company is performing.
Quick ratio (acid test ratio)(Current Assets − Inventory) ÷ Current Liabilities. Example: ($150,000 − $30,000) ÷ $100,000 = 1.20; a ratio of one or more is generally acceptable by most creditors.
Straight-line depreciation(Initial Asset Cost − Salvage Cost) ÷ Useful Life Years = Yearly Depreciation. Example: ($80,000 − $5,000) ÷ 5 = $15,000 per year.
Activity duration (scheduling)Total Labor Hours ÷ Hours per Day Available for the Task = Activity Duration in working days. Example: 16 hrs ÷ 4 hrs/day = 4 working days.
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