Idaho HVAC Contractor Exam

Key Concepts

Why contractors fail (Introduction — Page 6) - The Introduction quotes Nick B. Ganaway: "Only 43 per cent of U.S. construction firms remain in business after four years. Why? Inadequate management, according to the U.S. Small Business Administration." - Per Dun & Bradstreet's 2012 U.S. Business Trends Annual Report, "the industries with the highest failure rates are Construction, Retail, Transportation and Manufacturing." - Per the Surety Information Office, failure is attributed to these categories (Page 6): - Accounting Issues: inadequate cost tracking systems; estimating or procurement problems; underinsured; improper accounting practices - Finance Issues: slow collections; insufficient capital; low profit margins; poor bidding/underestimated costs - Management Issues: leadership changes; inexperienced management; no continuity plan when a key…

Key Concepts

Selecting an Accountant (Section 2: Developing Professional Relationships – Selecting an Accountant, Page 13) - The Idaho State Board of Accountancy licenses and regulates Certified Public Accountants (CPA) and Licensed Public Accountants (LPA) — these are the two categories of accounting professionals under the Board's jurisdiction (Page 13). - To verify a license before hiring, a contractor may call the Board of Accountancy or visit www.isba.idaho.gov, where a list of all licensed accountants is available (Page 13). - Services a CPA or LPA can provide include: assisting in the design and installation of data processing management information systems, tax preparation, accounting system reviews, business consulting, and loan application assistance (Page 13). - For loans and credit, a…

All material comes from Section 3, Pages 16–19 of the Division of Occupational & Professional Licenses Contractor's Business and Law Reference Manual.

Key Concepts

Recognized forms of organization (Page 16). In Idaho, a business may operate as a Sole Proprietorship, a General Partnership, a Limited Liability Partnership, a Limited Partnership, a Limited Liability Company, or a Corporation. Each form has significant tax and legal consequences, and a qualified tax and/or legal advisor should be consulted. For legal description, see Idaho Statutes, Title 53 Partnership.

Sole Proprietor (Page 16). A business owned and controlled by one person who is solely liable for its obligations.

Exam: Idaho contractor licensing exam

Key Concepts

DOPL's mission (Section 4: Licensing Information, Page 20) The mission of the Division of Occupational and Professional Licenses (DOPL) is to safeguard the citizens of Idaho through responsible administration of building and construction-related safety and licensure standards while promoting a positive business climate.

Regulatory boards housed within DOPL (Page 20) DOPL is host to seven regulatory boards within the Executive Office of the Governor:

1. Idaho Building Code Board
2. Idaho Electrical Board
3. Idaho Heating, Ventilation and Air Conditioning (HVAC) Board
4. Idaho Plumbing Board
5. Manufactured Housing Board
6. Modular Building Advisory Board
7. Public Works Contractors License Board

Idaho Contractor's Business and Law Reference Manual — Section 5

Key Concepts

Bookkeeping process (Section 5: Accounting & Finance — Bookkeeping, Page 23). The flow is: business transaction (debit or credit) → journal entry → general ledger → trial balance → financial statements. At the end of an accounting period all journal entries are totaled and transferred to the general ledger — this is called "posting." A trial balance is the act of totaling debit balances and credit balances to confirm that total debits equal total credits.

Financial management (Section 5, Financial Management, Page 22). The financial manager is normally the owner/contractor. Responsibilities: making financial decisions, managing cash flow, managing cost and profits, and accounting for financial resources.

Key Concepts

Federal anti-discrimination laws - ADEA applies to employers of 20 or more employees in industries affecting interstate commerce and protects people 40 or older (Sec. 6 — ADEA, p. 39–40). Favoring an older worker over a younger one is not illegal, even if both are 40+ (Sec. 6 — ADEA, Age Discrimination). A neutral policy is illegal if it negatively impacts applicants/employees 40+ and is not based on a reasonable factor other than age (Sec. 6 — ADEA, Employment Policies/Practices). - ADA generally applies to employers with 15 or more workers (Sec. 6 — ADA, p. 40). Disability is shown three ways: a condition substantially limiting a major life activity, a history of disability, or being believed…

Key Concepts

Idaho insurance mandates. Idaho requires businesses to carry worker's compensation insurance and unemployment insurance, with few exceptions; contractors must also provide proof of liability insurance (Section 7: Insurance, Page 65).

Insurance types and their purposes (Section 7: Insurance bullets, Pages 65–66): - Builder's risk — covers damage to the work itself while under construction; may be obtained by owner or contractor; insures any physical improvements, not just structures; typically covers loss of or damage to materials intended for use in the project. All-risk is the most common type; named-peril protects only against specifically named items in the policy (Page 65). - Commercial general liability — third-party bodily injury or property damage as a result of the construction…

Section 8: Estimating & Bidding

Key Concepts

What a bid is. A bid is a formal offer to provide services and/or items within a specified time for a specific price. Obtaining profitable work through successful bidding is what separates successful contractors from weaker competitors. (Section 8: Estimating & Bidding, Bidding, Page 79)

Open (hard) bid. In public works construction there are two types of bids: open and closed. An open bid (also called a hard bid) is the most common type of competitive bidding; all competitors use the same proposal form provided with the bidding documents. The price quoted in the offer is final and no adjustments to the bid are allowed. Open bids are opened and read…

Idaho Contractor's Business and Law — Section 9: Contracts

Key Concepts

Essential elements of a legally valid contract (Section 9: Contracts, Page 84) - Offer and Acceptance — a clear or definite offer and an unqualified acceptance. - Consideration — each party must promise or provide something of value to the other. - Parties — anyone entering a contract must be an adult of sound mind; the contract shall state all parties, including names and addresses (if applicable). - Mutuality of Obligation — a "Meeting of the Minds": mutual understanding and assent; the parties must agree to the same thing, in the same sense, at the same time. - Legal Purpose or Objective — contracts can have any type…

Division of Occupational & Professional Licenses Contractor's Business and Law Reference Manual (Idaho)

Key Concepts

The five phases (Page 88). The manual's numbered list of the steps of project management is: (1) initiation & estimating, (2) planning, (3) monitoring & controlling, (4) executing, (5) closing. Note that this list places monitoring & controlling before executing — memorize the order exactly as printed.

Initiation and estimating (Page 89). The initiation process determines the nature and scope of the project. The initiation plan must cover: analyzing business needs/requirements in measurable goals; reviewing current operations; financial analysis of the costs and benefits including a budget; stakeholder analysis; and project definition. A stakeholder is any person or organization who can be positively or…

Idaho Contractor's Business and Law Reference Manual — Section 11: Safety

Key Concepts

Poster and Form 300 display (Section 11, p. 100, Workplace Poster Requirements) - All employers, regardless of number of employees, must exhibit the OSHA poster "Job Safety and Health, IT'S THE LAW!" at a location visible to all employees. - Employers with 11 or more employees must also exhibit OSHA Form 300, Log of Work-Related Injuries and Illnesses. - Failure to display the required poster and Form 300 (if applicable) carries a penalty of $1,000 for each violation. - A repeat serious violation fine may be over $150,000 per repeat violation.

Key Concepts

Contractor is the "consumer" — "The sales tax law says a contractor is the consumer of the goods he uses. Therefore, he must pay sales tax on all his purchases," including equipment, tools, supplies, building materials, and fixtures (fixtures include lighting/plumbing fixtures, furnaces, boilers, heating or air-conditioning units, refrigeration units, water heaters, etc.). If not charged sales tax, the contractor must pay use tax, get a use tax number from the Idaho State Tax Commission, and file use tax returns; the use tax rate equals the sales tax rate. (Brochure #40, "How does sales tax apply to a contractor?", Page 153)

Source: DOPL Contractor's Business and Law Reference Manual, Section 13, Pages 158–167 (Idaho Code Title 45, Chapter 5)

Key Concepts

Who has lien rights — Idaho Code 45-501 (p. 158) - Every person performing labor upon, or furnishing materials to be used in, the construction, alteration or repair of any mining claim, building, or other structure, or who grades, fills in, levels, surfaces or otherwise improves any land, has a lien. - Every professional engineer or licensed surveyor under contract who prepares or furnishes designs, plans, plats, maps, specifications, drawings, surveys, estimates of cost, on-site observation or supervision, or renders any other professional service in connection with any land or building development or improvement, has a lien. -…