Exam Cheat Sheet · Quick Reference

Oklahoma Mechanical Business and Law

Oklahoma  ·  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

Oklahoma State Portion 50 questions

Bidding and Estimating 10 Q · 20%
Quantity take-off method and cost componentsLabor cost calculation and labor burdenOverhead costs: project vs. company overheadMarkup and profit margin determinationBid documents, addenda, and bid submission requirementsEthics in bidding: bid shopping, peddling, and riggingEstimating methods: square-foot, unit price, and conceptualJob cost recording system and cost code structureGeneral EstimatingBid
Project Management and Supervision 7 Q · 14%
Scheduling methods: calendar, bar chart, and critical path method (CPM)Scheduling process: task sequence, activity duration, contingency time, and float timeProject manager roles and responsibilitiesProject supervisory team roles: superintendent, foreman, materials expediter, and owner's representativeProject life cycle phases: pre-construction, construction, and closeoutBudget and cost controls: tracking cost overruns and just-in-time materials managementTracking project progress: daily reports and status reportsQuality assurance and value engineeringGeneral Project OversightOversee BudgetOversee Quality ControlOversee Materials Control +7 more
Contracts 5 Q · 10%
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)Contract provisions for payment terms, progress payments, and retainageBreach of contract types, liquidated damages, and statute of limitationsChange orders and contract modificationsAlternative dispute resolution methods (negotiation, mediation, arbitration, collaborative law)Contracting methods (single prime, design/build, construction management, multiple prime, partnering)Subcontracting requirements and oral vs. written agreementsTerminologyRequired Elements/ComponentsContract TypesChange Orders +5 more
Financial 8 Q · 16%
Mechanics' and materialmen's lien rights and filing requirementsPre-lien notice requirements for subcontractors and suppliersLien priority, enforcement, and foreclosure proceduresTrust fund requirements for construction contract proceedsBusiness structure types and financial liability implicationsFinancial statements and accounting methods for contractorsSurety bonds types, qualifying requirements, and claimsCash flow management, progress payments, and retainageBusiness Organization Characteristics, Advantages, and DisadvantagesBusiness Start-upAccounting methodCash Flow Terminology +8 more
Labor and Personnel 5 Q · 10%
Prohibited interview questions and lawful hiring practicesKey employment laws (FLSA, ADA, Immigration and Nationality Act)Hiring minors in construction: working hours and prohibited tasksChild labor law penalties and enforcementEmployee documentation requirements (Form I-9, W-4, personnel files)New hire reporting requirements and purposeWorkers' compensation obligations and fraud preventionEmployee vs. independent contractor classification under IRS guidelinesADALabor StandardsRequirements for Non-citizens and/or NonresidentsWorkers' Compensation +4 more
Risk Management 4 Q · 8%
Types of insurance coverage for construction businesses (property, liability, automobile, burglary and theft)Commercial general liability (CGL) insurance and supplemental liability policiesSurety bond types and their purposes (bid, performance, payment, maintenance, fidelity, lien)Workers' compensation insurance requirements and employer obligations under Oklahoma lawBond qualifying criteria, pricing, and claims processFederal bonding laws (Miller Act and Construction Industry Payment Protection Act of 1999)Insurance coverage requirements for subcontractorsCoverage gaps, overlaps, and business owner's policies (BOPs)InsuranceBonds
Payroll and Payroll Taxes 5 Q · 10%
Federal employment taxes: FICA (Social Security and Medicare)Federal income tax withholding and Form W-4Federal unemployment tax (FUTA) calculation and deposit requirementsPayroll tax deposit schedules and deadlinesGross pay and net pay calculation with deductionsForm W-2 and W-3 filing requirements and deadlinesPenalties for late or incorrect payroll tax depositsEmployer Identification Number (EIN) requirements and applicationTaxesForms and Due Dates
Licensing Requirements 6 Q · 12%
License types and categories for mechanical contractors, journeymen, and apprenticesQualifications and experience requirements for licensureLicense application, examination, and re-examination proceduresLicense duration, renewal, and continuing education requirementsBond and insurance requirements for mechanical contractorsExemptions from licensing requirementsTemporary and reciprocity licensure provisionsProhibited acts and grounds for license suspension or revocationRequired Insurance/BondsRenewal

Key Distinctions

Company overheadvsProject overhead

Company overhead is the cost of doing business that cannot be directly linked to a specific project (office rent, accounting fees, taxes, telephone, legal fees, administrative labor), while project overhead covers project-specific items like bonds, temporary storage/office, security, utilities, dumpsters, and portable toilets.

NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Add Company Overhead section (Page 6-6)
Bid peddlingvsBid shopping

Bid peddling is a subcontractor approaching the general contractor after award to lower its original bid-day price, while bid shopping is the general contractor seeking lower bids from other subcontractors after original bids are submitted.

NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Bid Peddling section (Page 6-2)
ArbitrationvsMediation

In arbitration a third-party arbitrator acts as a judge and issues an arbitral award that legally binds all parties, while a mediator only facilitates dialogue and the parties set the terms with no binding decision.

NASCLA Contractors Guide (14th ed.), Chapter 7 — Arbitration
Accrual methodvsCash basis

Under the accrual method (used by most construction businesses) income is recognized when services occur and expenses when incurred, rather than when money is collected or paid.

NASCLA Contractors Guide (14th ed.), Chapter 14 — Accrual Method section
Named peril builder's risk insurancevsAll-risk builder's risk insurance

Named peril policies have narrower coverage and list only the perils covered (e.g., fire and lightning), while all-risk policies cover all perils not specifically excluded.

NASCLA Contractors Guide (14th ed.), Chapter 3 – Named Peril Builder's Risk Insurance section
Bank letter of creditvsSurety bond

A bank letter of credit is not a bond but a cash guarantee to the owner (not a guarantee of performance) customarily covering only 5 to 10 percent of the contract, whereas performance bonds are usually set at 100 percent of the contracted price.

NASCLA Contractors Guide (14th ed.), Chapter 3 – Bond Language section
Direct costsvsOperating (indirect) expenses

On the income statement, direct costs are directly linked to a particular project (materials, subcontractor fees, permit fees, labor), while office salaries, advertising, and warehouse rental are operating/indirect expenses.

NASCLA Contractors Guide (14th ed.), Chapter 2 — Income Statement section
Critical path method (CPM)vsCalendar and bar chart (Gantt) scheduling

CPM graphically illustrates interdependent relationships between tasks, while calendar and bar chart methods share the weakness of not showing activity interdependencies or delay impacts.

NASCLA Contractors Guide (14th ed.), Chapter 8 — Critical Path Method section
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 (14th ed.), Chapter 8 — Float Time section
Cost-plus contract paymentsvsUnit-price contract payments

Cost-plus progress payments are based on actual costs incurred plus a proportionate markup with reconciliation once actual costs are known, while a unit-price contract pays a calculated price per unit according to the actual quantities used when the extent of work cannot be determined in advance.

NASCLA Contractors Guide (14th ed.), Chapter 13 — Payment for Cost-Plus Contracts section
Square-foot methodvsUnit price method

The square-foot method multiplies project square footage by a unit cost for a quick early estimate but ignores project specifics, while the unit price method bundles labor, materials, equipment, and subcontractors into a single unit price for an entire task.

NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Other Methods of Estimating section (Page 6-7)
Conceptual estimatevsPreliminary estimate

A conceptual estimate is generally prepared by the architect using cost models from previous projects, while a preliminary estimate is the risky practice of quoting a price to a customer before accurate calculations are made.

NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Other Methods of Estimating section (Page 6-7)
Material breachvsLiquidated damages

A material breach is a serious contract violation (such as an owner refusing to pay for completed work) that may void the contract and end in litigation with monetary damages, while liquidated damages are a contractually specified per-day assessment for late completion, and an owner suing for liquidated damages cannot also sue for actual damages.

NASCLA Contractors Guide (14th ed.), Chapter 7 — Breach of Contract

Key Terms

Company overhead NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Add Company Overhead section (Page 6-6)
The cost of doing business that cannot be directly linked with a specific project, including office rent, accounting fees, taxes, telephone, legal fees, and administrative labor.
Bid rigging NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Bid Rigging section (Page 6-2)
A form of collusion in which contractors coordinate their bids to fix the award outcome of a project; some state statutes forbid it on public projects.
Addendum NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Bid Documents section (Page 6-1)
A document issued when changes are made to a bid package before bids are due; it becomes part of the bid documents and ultimately part of the awarded contract.
Allowance NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Add Allowances section (Page 6-5)
An amount included in an estimate as the owner's budget for items not specified in the project plans (such as fixtures and lighting); a change order is created if the owner's choices exceed or fall short of the allowance.
Labor burden NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Labor Burden section (Page 6-4)
An addition of approximately 30 percent to labor cost covering Medicare and Social Security, federal and state unemployment insurance, workers' compensation, liability insurance, and company benefits — not raw materials.
Quantity take-off NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Quantity Take-off section (Page 6-3)
An estimating method in which materials and labor are estimated first, then subcontractor fees, labor burden, project overhead, project equipment, contingencies, allowances, company overhead, and profit are added.
Distribution code NASCLA Contractors Guide (14th ed.), Bidding and Estimating chapter — Job Cost Recording System section (Page 6-8)
A one-letter code identifying the type of cost — Material (M), Labor (L), Equipment (E), Project Overhead (P) — placed behind the activity classification code to form a complete cost code such as 06200L.
CSI MasterFormat NASCLA Contractors Guide (14th ed.), Pages 6-3 and 6-8
A Construction Specifications Institute classification system of numbers and job tasks grouped by major construction activities, recommended for both estimates and job cost tracking so estimated and actual costs can be compared.
Arbitral award NASCLA Contractors Guide (14th ed.), Chapter 7 — Arbitration
The decision rendered by the arbitrator(s) in arbitration, which is legally binding on all parties, unlike mediation.
Indemnification NASCLA Contractors Guide (14th ed.), Chapter 7 — Provisions to Limit Risk section
A contract provision that absolves the indemnified party from any payment for losses and damages incurred by a third party by shifting liability to the other contracting party.
Indemnity NASCLA Contractors Guide (14th ed.), Chapter 3 (Managing Risk) — Insurance Defined section
In insurance terminology, a way to transfer risk and provide exemption from loss incurred by any course of action; an insurance payout is sometimes called an indemnity.
Inland marine insurance NASCLA Contractors Guide (14th ed.), Chapter 3 — Inland Marine/Equipment Theft Insurance section
Property insurance covering goods in transit and projects under construction, which can be purchased to protect tools and equipment.
Motor truck cargo insurance NASCLA Contractors Guide (14th ed.), Chapter 3 (Managing Risk) — Transportation Floater and Motor Truck Cargo Insurance section
A type of inland marine insurance protecting the transporter against damaged or lost freight, including contractors hauling equipment or materials to and from the jobsite.
Contractor's protective public and property damage liability insurance NASCLA Contractors Guide (14th ed.), Chapter 3 (Managing Risk) — Other Types of Liability Insurance section
Supplemental coverage protecting contractors who supervise subcontractors and are held liable for the subcontractors' actions causing personal injury or property damage, addressing exclusions in a standard CGL policy.
Maintenance bond NASCLA Contractors Guide (14th ed.), Chapter 3 (Managing Risk) — Bond Language section
A bond whose amount is generally set as a percentage of estimated cost, often 10 percent of construction cost.
FUTA (Federal Unemployment Tax) NASCLA Contractors Guide (14th ed.), Chapter 14 — Federal Unemployment Tax (FUTA) section
A tax paid solely by the employer and reported on Form 940, for which employers who timely pay state unemployment tax receive an offset credit; deposits under $500 may be carried forward to the next quarter.
SUTA dumping NASCLA Contractors Guide (14th ed.), Chapter 3 (Managing Risk) — Unemployment Insurance section
The prohibited practice of transferring employees between businesses to obtain a lower unemployment compensation tax rate, subject to criminal and/or civil penalties under state law.
Employer Identification Number (EIN) NASCLA Contractors Guide (14th ed.), Chapter 14 — Employer Identification Number section
A 9-digit number issued by the IRS in the format 00-0000000 used to identify the tax accounts of employers.
Oklahoma prime contractor workers' comp liability Oklahoma Workers' Compensation Act Statutory Excerpts, Title 85A, Section 36
Under Title 85A, Section 36, if a subcontractor fails to secure required workers' compensation coverage, the prime contractor is liable for compensation to that subcontractor's employees unless an intermediate subcontractor has coverage.
Workweek (FLSA) NASCLA Contractors Guide (14th ed.), Chapter 10 — Fair Labor Standards Act section
A period of 168 hours during seven consecutive 24-hour periods, which may begin on any day and hour established by the employer.
Value engineering NASCLA Contractors Guide (14th ed.), Chapter 8 — Value Engineering section
A project management approach whose objective is to understand the owner's cost, quality, and time priorities to deliver a product of the highest value, often with owner incentives such as bonuses.
Just-in-time (JIT) delivery NASCLA Contractors Guide (14th ed.), Chapter 8 — Just-In-Time section
Timing material deliveries to arrive as needed in the construction process, keeping inventory costs low and reducing risk of theft or vandalism.
Punch list NASCLA Contractors Guide (14th ed.), Chapter 8 — Job Completion and Closeout section
A list of follow-up items developed after the closeout walkthrough of completed work, along with discussing warranties and warranty repair procedures with the customer.
Posting / general ledger NASCLA Contractors Guide (14th ed.), Chapter 13 — Post Transactions section
Posting is the process of transferring transactions recorded in the journals to the appropriate accounts, which are located in the general ledger.
Income statement NASCLA Contractors Guide (14th ed.), Chapter 13 — Income Statement section
Also called the profit-and-loss statement, a summary of revenues minus cost of goods sold and expenses over a given period showing gross profit and net income; it also supplies overhead costs and revenues for overhead percentage calculations.
Current liabilities NASCLA Contractors Guide (14th ed.), Chapter 2 — Balance Sheet section
Liabilities that will mature and must be paid within one year, such as accounts payable (trade credit), as listed on the balance sheet.

Formulas to Know

Labor cost for a taskRequired Labor Hours per Task × Labor Rate = Labor Cost per Task (hours spent planning and scheduling must also be figured into this equation)
Total material cost per category on a take-off sheetPrice per Unit × Number of Units Needed = Total Material Unit Cost (add a small waste contingency that varies by material type and job specifications)
Owned equipment unit cost per hourTotal Yearly Equipment Cost ÷ Estimated Hours of Use per Year = Unit Cost per Hour (e.g., $12,000 ÷ 600 = $20/hr)
Project equipment cost for a jobUnit Cost per Hour × Hours Used on Project (e.g., $30,000 ÷ 1,000 hrs = $30/hr; $30 × 60 hrs = $1,800)
Bid price covering direct costs plus overhead (overhead division method)Direct Costs ÷ (1 − Total Overhead %) = Bid Price before profit markup (e.g., 20% total overhead: $200,000 ÷ 0.80 = $250,000; $100,000 ÷ 0.80 = $125,000)
Company overhead percentageTotal Overhead Costs from Previous Year (income statement administrative expenses) ÷ Revenues (income statement); overhead percentages generally average 5%–20%
MarkupApply markup (standard industry markup is 15 percent, considering market and competition) to direct costs — labor, material, project equipment, project overhead, and subcontractors
Liquidated damagesPer-Day Rate × Number of Days Late = Total Liquidated Damages (e.g., $400 × 30 = $12,000; $500 × 20 = $10,000)
Percentage of completion earningsProject Costs Incurred ÷ Total Estimated Costs = % Complete; % Complete × Contract Amount = Cumulative Earnings (e.g., $300,000 ÷ $1,000,000 = 30%; 30% × $1,500,000 = $450,000)
Working capitalCurrent Assets − Current Liabilities = Working Capital (e.g., $26,400 − $8,200 = $18,200; dividing instead gives the liquidity ratio)
Net payGross Pay − (all taxes and deductions) = Net Pay (e.g., $3,200 − $884.80 = $2,315.20)
Activity durationTotal Labor Hours ÷ Hours per Day Available for the Task = Working Days (e.g., 16 ÷ 4 = 4 working days)
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