Exam Cheat Sheet · Quick Reference

Ohio Contractor's Business and Law Exam

Ohio  ·  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

Ohio State Portion 50 questions

Business Organization 2 Q · 4%
C corporation formation, liability, taxation, and Ohio registration requirementsLimited Liability Company (LLC) structure, taxation, and Ohio registrationBusiness naming requirements and Ohio name registration procedures
Licensing 3 Q · 6%
Ohio Construction Industry Licensing Board structure and authorityLicense application requirements and eligibility criteriaExamination process and passing standardsLicense issuance, assignment to contracting company, and display requirementsLicense renewal requirements and continuing education obligationsReciprocity agreements and out-of-state licensureDisciplinary actions, violations, and penalties for licensed and unlicensed contractorsInactive license status and reactivation procedures
Estimating and Bidding 8 Q · 16%
Contract Management 5 Q · 10%
Project Management 4 Q · 8%
Insurance and Bonding 5 Q · 10%
Employment-related insurance requirements (workers' compensation, unemployment insurance, Social Security) including Ohio-specific rulesFederal and Ohio state bonding laws (Miller Act, Construction Industry Payment Protection Act of 1999, Ohio Little Miller Act requirements)
OSHA Record Keeping and Safety 5 Q · 10%
OSHA Form 300, 300A, and 301 completion and posting requirementsRecordable vs. non-recordable injuries and illnesses (first aid definitions and recording criteria)OSHA injury decision tree for work-related incident determinationRetention periods for OSHA records, exposure records, and medical recordsReporting requirements for fatalities and multiple hospitalizations
Personnel Regulations 5 Q · 10%
New hire reporting requirements and deadlines (Ohio New Hire Reporting System)Workers' compensation coverage requirements and fraud prevention (ORC Chapter 4123)Ohio Minimum Fair Wage Standards and wage discrimination prohibitions (ORC Chapter 4111)Employment of minors in construction (work permits, hour restrictions, prohibited hazardous tasks)
Financial Management 6 Q · 12%
Tax Laws 5 Q · 10%
Ohio state taxes applicable to contractors (CAT, sales and use tax, individual income, withholding, municipal income tax)Ohio unemployment compensation employer obligations and quarterly reporting
Lien Laws 2 Q · 4%
Definition and purpose of mechanics' liens under Ohio Revised Code Chapter 1311Parties entitled to mechanics' lien rights (original contractors, subcontractors, laborers, material suppliers)Notice of Commencement requirements, content, filing, and posting obligationsNotice of Furnishing requirements, deadlines, and consequences of late or missing filingAffidavit for Mechanics' Lien filing deadlines by project type (residential, commercial, oil/gas)Priority of mechanics' liens relative to mortgage liens and among lien claimantsDischarging, releasing, and bonding around a mechanics' lienSpecial rules for home construction contracts and residential lien limitations

Key Distinctions

Bid shoppingvsBid peddling

Bid shopping is the general contractor approaching subcontractors other than those who submitted bids to seek a lower offer, while bid peddling is the 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 rigging is a form of collusion where contractors coordinate their bids to fix the award outcome of a project, whereas bid shopping is a general contractor seeking lower subcontractor bids after original bids are submitted.

NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Rigging 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 one price for the entire task.

NASCLA Contractors Guide, Bidding and Estimating chapter — Quantity Take-off section
Square-foot methodvsCubic-foot method

The square-foot method is a quick estimate that does not account for project specifics affecting cost, and the cubic-foot method is a variation of it in which project cost is found by multiplying the cubic feet of the project by a unit cost.

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

Project overhead includes bonds, temporary storage, temporary office, security guard, utilities, dumpsters, and portable toilets, while company overhead includes office rent, accounting fees, and legal fees.

NASCLA Contractors Guide, Bidding and Estimating chapter — Add Project Overhead section
AddendumvsChange order

An addendum communicates changes made to a bid package before the bid is due and becomes part of the contract when awarded; a change order is created after the fact when, for example, the owner's allowance selections come in over or under the contract allowance amount.

NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
All-risk builders' risk insurancevsNamed peril builders' risk insurance

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

NASCLA Contractors Guide, Managing Risk chapter — Insurance section
Material breachvsImmaterial (partial) breach

A material breach (e.g., contractor refuses to perform/complete or owner refuses to pay) is a serious violation that may void the contract and most likely ends 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
ArbitrationvsMediation

In arbitration a third-party arbitrator acts as a judge and renders an arbitral award that legally binds all parties, while in mediation the mediator only facilitates discussion and the parties set the terms.

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

They 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
Leasing equipmentvsPurchasing equipment

Leasing requires no down payment, spreads lower payments over a longer period, allows lease payments to be deducted as operating expenses, and returns obsolete equipment to the owner, but purchasing usually costs less in the long run and gives ownership/salvage value (leases generally cannot be cancelled).

NASCLA Contractors Guide, Bidding and Estimating chapter — Determining Estimated Costs section
Ohio wage/hour records (ORC 4111.08)vsOhio workers' compensation payroll records (ORC 4123.24)

Wage and hour records under the minimum fair wage standards must be kept not less than three years, while workers' compensation payroll records must be preserved at least five years.

Ohio Revised Code Chapter 4111 (Minimum Fair Wage Standards), Section 4111.08 — Appendix I
Ohio LLC formation filingvsOhio partnership filing

A domestic Ohio LLC is created by filing Articles of Organization (Form 533A) with the Secretary of State for $125, while a partnership uses the Statement of Partnership Authority at $99; the Operating Agreement is internal and not filed.

NASCLA Contractors Guide, Ohio (4th ed.), Page 2-5

Key Terms

Addendum NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
A 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.
Allowance NASCLA Contractors Guide, Bidding and Estimating chapter — Add Allowances section
An amount included in an estimate representing the owner's budget for items not specified in the project plans, such as carpeting, fixtures, and lighting.
Contingency NASCLA Contractors Guide, Bidding and Estimating chapter — Add Contingencies section
A percentage sometimes added to an estimate to protect the contractor if an unanticipated problem or condition arises, generally based on the project's risk level (e.g., a low-risk project might use 2 percent, a higher-risk project more).
Unresponsive bidder NASCLA Contractors Guide, Bidding and Estimating chapter — Bid Documents section
A bidder who may be so designated if information in the bid package is incorrectly submitted or omitted altogether.
Conceptual estimate NASCLA Contractors Guide, Bidding and Estimating chapter — Other Methods of Estimating section
An estimate generally prepared by the architect using cost models from previous projects, which may differ substantially from the contractor's cost due to the project's unique characteristics.
Preliminary estimate NASCLA Contractors Guide, Bidding and Estimating chapter — Preliminary Estimates section
The risky practice of quoting a price to a customer before accurate calculations can be made — too high may lose the bid, 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 and is recommended as an estimating checklist.
Cost code system NASCLA Contractors Guide, Bidding and Estimating chapter — Job Cost Recording System section
A job cost recording structure with three components — project number, activity classification code, and distribution code — where the distribution code identifies material (M), labor (L), equipment (E), or project overhead (P).
Project manual NASCLA Contractors Guide, Contract Management chapter — Contract Documents and Project Manual section
A central location containing bid documents, contract provisions, technical specifications, and addenda.
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.
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
A period of 168 hours during seven consecutive 24-hour periods.
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.
MACRS (Modified Accelerated Cost Recovery System) NASCLA Contractors Guide, Financial Management chapter — Depreciation Methods section
An IRS-approved depreciation method that allows larger depreciation deductions in the earlier years of an asset's useful life than straight-line depreciation.
Limited Liability Company (LLC) NASCLA Contractors Guide, Choosing Your Business Structure chapter — Limited Liability Company (LLC) section
A hybrid legal structure that shares characteristics of both sole proprietorships and corporate identities.
Ohio reciprocity (ORC 4740.08) NASCLA Contractors Guide, Ohio (4th ed.), Chapter 3 (Becoming a Licensed Contractor), Reciprocity section; Appendix E — ORC 4740.08
Ohio offers license reciprocity only to individuals who took the other state's recognized examination; grandfathered licensees are not eligible unless otherwise specified (Tennessee is the listed exception allowing grandfathered applicants).
Older trade experience (OAC 4101:16-2-01(H)(3)(a)) NASCLA Contractors Guide, Ohio (4th ed.), Appendix F — OAC 4101:16-2-01(H)
Five years of experience not immediately preceding the application may be accepted if at least three of those five years were performing construction work on commercial or residential projects in the licensed trade; education programs other than a state-approved apprenticeship may substitute for no more than one of the five years.
Payroll misrepresentation penalty (ORC 4123.25(A)) Ohio Revised Code Chapter 4123 (Workers' Compensation), Section 4123.25 — Appendix J
An employer who knowingly misrepresents the amount or classification of payroll on which workers' compensation premium is based is liable to the state, as determined by the administrator, in an amount of not more than ten times the difference between the premium paid and the amount that should have been paid, enforceable by civil action with sums paid into the state insurance fund.

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 the labor cost)
Total material unit costPrice 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 Equipment Cost ÷ Estimated Hours of Use per Year = Unit Cost per Hour; 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%, 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 − all taxes and deductions. Example: $3,200 − ($384 + $198.40 + $46.40 + $160 + $96 = $884.80) = $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 to most creditors.
Straight-line depreciation(Initial Asset Cost − Salvage Cost) ÷ Useful Life in 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 hours ÷ 4 hours/day = 4 working days.
Ohio Little Miller Act bid security alternative to a full bid bond (non-ODOT public construction contracts)Certified check, cashier's check, or letter of credit = 10% of the bid. Example: 10% × $900,000 = $90,000.
Liquidated damagesPer-Day Liquidated Damages × Days Late = Amount Collectible. Example: $500/day × 20 days = $10,000 (owner cannot also sue for actual damages).
Start free practice Full study guide