Exam Cheat Sheet · Quick Reference
Mississippi Law and Business Management Exam
Mississippi · 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
Mississippi State Portion 50 questions
Licensing
5 Q · 10%
When a contractor's license is required (commercial vs. residential dollar thresholds)Exemptions from commercial and residential licensing requirementsLicensing application process and required documentationFinancial requirements and insurance requirements for licensureLicense classifications (major and specialty classifications)Reciprocity agreements with other statesBidding requirements and Certificate of Responsibility number on bid envelopesDisciplinary actions, penalties, and appeals process
Estimating and Bidding
7 Q · 14%
Quantity take-off method for estimating materials and labor costsCalculating overhead percentages and adding markup for profit marginBid documents, addenda, and bid submission requirementsEthics in bidding: bid shopping, bid peddling, and bid riggingEstimating framework: project phases, task lists, and materials identificationLabor burden components and labor cost calculation formulaEquipment cost estimation: renting, leasing, and owning considerationsJob cost recording system and cost code structure
Lien Law
1 Q · 2%
Who is entitled to a mechanics' lien (contractors, subcontractors, materialmen, design professionals)Filing a claim of lien: timeline, location, and required contentNotice requirements after filing a claim of lien (registered/certified mail within 2 business days)Timeframe to commence payment action and lis pendens filing (180-day rule)Interim waiver and release upon payment: purpose, form requirements, and 60-day deemed-paid ruleWaiver and release upon final payment: form requirements and 60-day deemed-paid ruleAffidavit of nonpayment: when to file and notification requirementsPayment bond: amount requirement (110%), approval process, and suit deadline
Financial Management
5 Q · 10%
Bookkeeping practices and the accounting cycleFinancial statements (balance sheet, income statement, statement of cash flows)Financial ratio analysis (liquidity, quick, activity, debt, profitability, return on assets)Cash and accrual methods of accountingContract accounting methods (completed contract, percentage of completion, cost comparison)Cash flow management and accounts receivable collectionPayroll accounting and deductions (gross pay, net pay, FICA, federal income tax withholding)Equipment depreciation methods (straight-line and accelerated/MACRS)
Tax Laws
5 Q · 10%
Employer Identification Number (EIN) requirements and how to obtainFederal tax forms by business entity type (sole proprietor, partnership, corporation, S-corp)Federal employment taxes: FICA, federal income tax withholding, and FUTADeposit schedules and requirements for payroll taxesSelf-employment tax obligations and filing thresholdsTax penalties for late or incorrect depositsMississippi state taxes: income, franchise, sales/use, and withholding tax specificsInformation returns (Form 1099-MISC) and tax calendar deadlines
Labor Laws
5 Q · 10%
Fair Labor Standards Act (FLSA) minimum wage and overtime requirementsChild labor laws and restrictions for minors in constructionImmigration and Nationality Act Form I-9 employment eligibility verificationAmericans with Disabilities Act (ADA) employer obligations and reasonable accommodationsNew hire reporting requirements and penalties in MississippiOther federal labor laws protecting employee rights (Title VII, ADEA, FMLA, WARN, USERRA)Mississippi right-to-work status and union-related labor lawsRequired workplace postings under federal and Mississippi law
Project Management
5 Q · 10%
Scheduling methods: calendar, bar chart, and critical path method (CPM)Scheduling process: sequence of tasks, activity duration, contingency time, and float timeProject manager roles and responsibilitiesProject supervisory team roles: superintendent, foreman, materials expediter, architect and owner's representativeProject life cycle phases: pre-construction, construction, and job closeoutTracking project progress: daily reports and status reportsBudget and cost controls: materials management, purchase orders, and cost overrunsQuality assurance: specifications, shop drawings, internal inspections, and value engineering
Contracts
6 Q · 12%
Required elements of a binding contract (offer, acceptance, consideration, competent parties, legal purpose)Types of construction contracts (lump-sum, unit-price, cost-plus, turnkey, fast-track, multiple prime)Breach of contract (material vs. immaterial breach, liquidated damages, statute of limitations)Contract provisions for payment (progress payments, retainage, final payment documentation)Alternative dispute resolution methods (negotiation, mediation, collaborative law, arbitration)Risk-limiting contract provisions (force majeure, indemnification, warranties, delay extensions, differing site conditions)Change orders and contract modifications (addenda vs. modifications, change order requirements, claims resolution)Subcontracting requirements and Mississippi Prompt Pay obligations
Business Organization
2 Q · 4%
Sole proprietorship characteristics, advantages, and disadvantagesGeneral and limited partnership formation, liability, and dissolutionC corporation structure, taxation, and Mississippi registration requirementsS corporation eligibility requirements and pass-through taxationLimited Liability Company (LLC) structure, membership, and tax treatmentComparison of business structures by ownership, liability, taxation, and managementJoint venture requirements for Mississippi contractorsBusiness naming rules, trade names, trademarks, and Mississippi Secretary of State registration
Risk Management
4 Q · 8%
Types of insurance coverage for contractors (property, liability, CGL, automobile, BOP)Surety bonds: types, language, and qualifying requirementsWorkers' compensation coverage requirements under Mississippi lawEmployment-related insurance (unemployment insurance, social security, SUTA dumping)Bond claims process and payment in event of defaultLaws governing bonding of federal and Mississippi state public construction projects (Miller Act, Little Miller Act)Insurance coverage gaps, overlaps, and subcontractor insurance verificationRisk management benefits and risk assessment fundamentals
Environmental and Safety
5 Q · 10%
OSHA standards and recordkeeping requirements (Forms 300, 300A, 301)OSHA penalty types and enforcement proceduresHazardous materials identification and Safety Data Sheets (SDS)Lead-based paint regulations and Lead Pre-Renovation Education Rule (Lead PRE)Asbestos identification, notification, and abatement requirementsClean Water Act, NPDES stormwater permits, and erosion/sedimentation controlEnvironmental laws and regulatory agencies (EPA and Mississippi DEQ)Jobsite safety programs, substance abuse policies, and emergency action plans
Key Distinctions
Bid shoppingvsBid peddling
Bid shopping is the general contractor revealing submitted bids to other subcontractors to get a lower price, while bid peddling is a losing subcontractor approaching the GC after award offering to beat the original bid-day price.
NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Bid Shopping section (Page 7-2)Unit price methodvsQuantity take-off method
The unit price method bundles labor, materials, equipment and subcontractors into one price for an entire task, while the quantity take-off method estimates each component individually.
NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Other Methods of Estimating section (Page 7-7)Arbitrator (arbitration)vsMediator (mediation)
An arbitrator acts as a judge and renders a legally binding arbitral award, while a mediator sets no terms and only facilitates dialogue so the parties reach their own mutual agreement.
NASCLA Contractors Guide, Mississippi (6th ed.), Chapter 8MediationvsCollaborative law
Mediation uses an independent neutral third party to facilitate dialogue while the parties set the terms, whereas collaborative law has no neutral mediator or arbitrator — the parties negotiate through their own advocates, usually lawyers.
NASCLA Contractors Guide, Contract Management chapter — Alternative Dispute Resolution sectionMaterial 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 likely leads to litigation, while an immaterial/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 sectionLiquidated damagesvsActual damages
An owner who sues for liquidated damages (the contract per-day rate × days late) cannot also sue for actual damages — they are mutually exclusive remedies.
NASCLA Contractors Guide, Mississippi (6th ed.), Chapter 8Critical path method (CPM)vsBar chart / calendar scheduling
CPM illustrates the interdependent relationships between tasks, while bar chart and calendar methods do not show interdependencies, so a delay's impact on other tasks is not visible.
NASCLA Contractors Guide, Mississippi (6th ed.), Chapter 9 (Scheduling and Project Management)Free float timevsTotal float time
Free float is the time an activity can be delayed without impacting the early start of the next activity, while total float is the leeway available without delaying the overall project completion date.
NASCLA Contractors Guide, Mississippi (6th ed.), Chapter 9 (Scheduling and Project Management)Leasing equipmentvsRenting equipment
Leasing is a long-term contract that generally cannot be cancelled and returns obsolete equipment to the owner at lease end, while renting is usually the costliest option but best for short-term specialized projects, replacements during repairs, high-maintenance equipment, and distant jobs needing transport/storage.
NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Determining Estimated Costs section (Page 7-5)Direct project equipment costvsIndirect cost
Equipment used directly on the project is a direct cost, while small tools and pickup trucks are indirect costs figured into project overhead rather than listed as project equipment.
NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Determining Estimated Costs section (Page 7-4)Commercial Certificate of Responsibility applicationvsResidential builder/remodeler license application
The commercial application requires a CPA-signed reviewed financial statement (net worth of $50,000 for major, $20,000 for specialty classifications) and a $400 fee plus $100 per additional classification, while the residential application requires only a $50 fee, general liability insurance certificate, federal tax ID/SSN, and a certificate of good standing if a corporation.
NASCLA Contractors Guide, Mississippi (6th ed.), Page 3 (Becoming a Licensed Contractor) - Licensing Process sectionMississippi commercial contractor license thresholdvsMississippi residential remodeler license threshold
A commercial license is required for work over $50,000 per job, while a residential remodeler license is required for improvements to an existing residence exceeding $10,000.
NASCLA Contractors Guide, Mississippi (6th ed.), Page 3 (Becoming a Licensed Contractor) and MS Code § 31-3-1S corporation entity tax obligationsvsS corporation shareholder tax obligations
The entity is liable for employment taxes (Social Security, Medicare, income tax withholding, FUTA), while income tax on S corporation income flows through to shareholders on Form 1040/Schedule E, and self-employment tax and Form 1040-ES estimated tax are individual responsibilities.
NASCLA Contractors Guide, Tax Basics chapter — Summary of Federal Tax Forms sectionErosion control measuresvsSediment control measures
Erosion control uses mulch and vegetation to permanently stabilize site soil, while sediment control uses a silt fence or hay bales placed at the down gradient side of the site to trap sediment.
NASCLA Contractors Guide, Chapter 12 — Sedimentation and Erosion Control Measures sectionKey Terms
Addendum NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Bid Documents section (Page 7-1)
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 awarded contract, so all addenda must be reviewed for impact on bid pricing and the decision to bid.
Labor burden NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Labor Burden section (Page 7-4)
Employer obligations such as employment taxes and insurance that add approximately 30 percent to the base labor cost.
Standard industry markup NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Add Markup section (Page 7-6)
The commonly used cost-based pricing markup of 15 percent, which the contractor should still balance against market and competition while maintaining profitability.
Estimating framework NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Estimating Framework section (Page 7-3)
A framework built by defining the phases of the project and listing each task and the materials needed for each phase (including labor time, material amounts, and needs such as overtime and temporary storage) before entering time and cost.
Project documents (for estimating) NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Project Documents section (Page 7-2)
The complete set needed to prepare an accurate cost estimate: construction/architectural drawings, specifications, the contract, and bonds.
Cost code system NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Job Cost Recording System section (Page 7-8)
A job cost recording system code with three components — a project number, an activity classification code (e.g., CSI MasterFormat number), and a distribution code placed behind it (M = material, L = labor, E = equipment, P = project overhead), e.g., 06200L for finish carpentry labor.
Bid review period NASCLA Contractors Guide, Mississippi (6th ed.), Bidding and Estimating chapter — Submitting Your Bid section (Page 7-8)
Bid review is generally a 30- to 90-day process, after which the bidder is notified of acceptance or rejection.
Certificate of Responsibility number on bid envelope MS Code § 31-3-21(2) and NASCLA Contractors Guide, Page 3 (Becoming a Licensed Contractor)
Under MCA § 31-3-21(2), all public or private bids in excess of $50,000 must show the contractor's current Certificate of Responsibility number on the outside of the envelope, or the bid shall not be opened or considered.
Major classifications (commercial CoR) Board Rule 30-802-1.1, Section 3.b
The six major classifications are Building Construction; Highway, Street and Bridge Construction; Heavy Construction; Municipal and Public Works Construction; Electrical Work; and Mechanical Work — work outside these (e.g., roofing and waterproofing) must be qualified as a specialty contractor.
Qualifying party MS Code § 31-3-13(a)
The individual who qualifies a Certificate of Responsibility holder; may serve no more than three separate entities without special Board permission, and upon disassociation the Board must be notified immediately in writing and a new party must qualify within 90 days or the Certificate is subject to suspension or revocation.
Mississippi licensing exemptions MS Code § 31-3-1(d) and NASCLA Contractors Guide, Page 3 (Becoming a Licensed Contractor)
Residential subdivisions where the contractor develops single-family or multifamily lots are exempt from commercial contractor licensing (MCA § 31-3-1(d)), and agricultural buildings, buildings used for agricultural purposes, community-effort buildings, and tenant houses are exempt from residential builder licensing (MCA § 73-59-15(1)(a)).
Mechanics' lien (Mississippi) NASCLA Contractors Guide, Mississippi (6th ed.), Page 16-1
Under § 85-7-403, contractors, subcontractors, materialmen, registered architects, professional engineers, and registered land surveyors furnishing services on real estate may claim a lien, with lien rights limited to properly licensed contractors.
Affidavit of Nonpayment notice to an entity owner NASCLA Contractors Guide, Mississippi (6th ed.), Page 16-5
Under Mississippi Code § 85-7-419, when the property owner is an entity on file with the Secretary of State, sending the affidavit copy to the company's address or registered agent's address on file with the Secretary of State is deemed sufficient.
Change order NASCLA Contractors Guide, Chapter 8
A written, legally binding agreement between owner and contractor changing the contract, including a description of and reason for the change, change in price, change in time, and both parties' signatures; post-signing changes are modifications executed through change orders.
Right-to-work (Mississippi) NASCLA Contractors Guide, Mississippi (6th ed.), Employee Management Chapter (Other Labor Laws section)
Mississippi is a right-to-work state, meaning employees decide for themselves whether to join or financially support a union and cannot be required to join or pay dues as a condition of employment.
SUTA dumping NASCLA Contractors Guide, Mississippi (6th ed.), Chapter 4 — SUTA Dumping section
Transferring employees between businesses to obtain a lower unemployment compensation tax rate; it is prohibited and subject to criminal and/or civil penalties under state law.
Value engineering NASCLA Contractors Guide, Chapter 9 (Scheduling and Project Management)
A project management approach whose objective is to understand the owner's cost, quality, and time priorities to deliver the highest-value product, sometimes with owner incentives such as bonuses for cutting costs without sacrificing quality.
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 customers, managers, subcontractors, and suppliers.
Contractor's protective public and property damage liability insurance NASCLA Contractors Guide, Managing Risk chapter — Insurance section
Supplemental coverage protecting a contractor who supervises subcontractors and is held liable for their actions causing personal injury or property damage, addressing exclusions in a standard CGL policy.
Employer Identification Number (EIN) NASCLA Contractors Guide, Mississippi (6th ed.), Tax Basics chapter — Employer Identification Number section (Page 15-1)
A 9-digit IRS-issued number formatted 00-0000000 that identifies the tax accounts of employers and certain others who have no employees.
Five basic account types NASCLA Contractors Guide, Mississippi (6th ed.), Page 14 (Financial Management chapter - Post Transactions section), Financial Management chapter — Post Transactions section
Asset, Liability, Equity, Income, and Expense — inventory is a subcategory of assets, not a basic account type.
Form W-4 NASCLA Contractors Guide, Mississippi (6th ed.), Page 14 (Financial Management chapter - Payroll Accounting / Calculate and Deduct Applicable Taxes section), Financial Management chapter — Payroll Accounting section
The employee-completed form whose information determines federal income tax withholding (using IRS Publication 15-T), as distinguished from the W-2 (year-end wage and tax statement), 1099 (independent contractor payments), and I-9 (employment eligibility).
Formulas to Know
Labor cost per task, with burden
Required Labor Hours × Labor Rate = Labor Cost per Task; then add ~30% labor burden (e.g., 80 hrs × $25 = $2,000; $2,000 × 0.30 = $600; total $2,600)Bid price after adding overhead
Direct Costs ÷ (1 − project OH% − company OH%) = bid price before profit markup (e.g., $100,000 ÷ 0.80 = $125,000 when OH is 9% + 11%)Overhead percentages for future bids
Company OH% = Company Overhead ÷ Total Revenues; Project OH% = Project Overhead ÷ Total Revenues (e.g., $220,000 ÷ $2,000,000 = 11%; $160,000 ÷ $2,000,000 = 8%)Owned equipment cost charged to a project
Hourly unit cost = Total Yearly Operating/Maintenance Cost ÷ Estimated Annual Hours; Project cost = unit cost × project hours (e.g., $30,000 ÷ 1,000 = $30/hr × 40 hrs = $1,200)Quick (acid test) ratio
(Current Assets − Inventory) ÷ Current Liabilities (e.g., ($150,000 − $30,000) ÷ $100,000 = 1.20); one or more is generally acceptable to creditorsWorking capital
Current Assets − Current Liabilities (e.g., $85,000 − $35,000 = $50,000)Straight-line depreciation
(Initial Asset Cost − Salvage Value) ÷ Useful Life in years (e.g., ($45,000 − $5,000) ÷ 8 = $5,000/yr)Percentage of completion — cumulative earnings
% Complete = Project Costs Incurred ÷ Total Estimated Costs; Cumulative Earnings = % Complete × Contract Amount (e.g., $80,000 ÷ $160,000 = 50%; 50% × $200,000 = $100,000)Net pay and profit margin
Net Pay = Gross Pay − Taxes and Deductions (e.g., $1,000 − $266.50 = $733.50); Profitability ratio (profit margin) = Net Income ÷ Revenues (e.g., $46,300 ÷ $545,600 ≈ 8.5%)Concrete volume, formwork area, and activity duration
Volume (cy) = Length × Width × Thickness (thickness in ft = inches ÷ 12) ÷ 27, rounded up when ordering whole yards (e.g., 200 × 2 × 1 = 400 cf ÷ 27 = 14.8 → 15 cy); Formwork contact area = Length × Form Height × Number of Faces (200 × 1.0 × 2 = 400 sf); Activity Duration = Labor Hours ÷ Hours per Day (16 ÷ 4 = 4 working days); Liquidated Damages = per-day rate × days late ($500 × 20 = $10,000)