AFSB 152 LATEST 2026 TEST PAPER QUESTIONS AND
SOLUTIONS RATED A+
✔✔What are the considerable differences between public and private work ....? -
✔✔Bid-list qualifications, Criteria for selecting winning bids, Amount of collaboration
among the contractor, the owner, and others, Quality of work expected and delivered,
Amount of change assumed in the bid or separately contracted for during construction
✔✔Key-Personnel Replacement - ✔✔-one of Schleifer's elements of risk
-the efforts of key personnel are generally responsible for a company's profitability.
-the loss of a profitable top manager can put a construction company at risk until a
suitable replacement is found
✔✔what are the three primary functions of a successful construction firm....? - ✔✔1)
estimating and sales (getting the work)
2) Construction operations (doing the work)
3) Administration and accounting (managing the work)
✔✔Managerial Immaturity - ✔✔-The last element of Schleifer's risks
-managerial maturity refers to the need for a contractor's managerial abilities to mature
as the business does.
-At some point in the growth of every company, the organization must change. an
organization may need more delegation of authority , more-complex systems and
procedures, and more sophisticated personnel to handle them.
✔✔What are the other factors associated with contractor failure....? - ✔✔overextension
continuity
subcontractor failure
nonpayment by owner/obligee
✔✔Overextension - ✔✔-when a contractor takes on a much larger job than it previously
had
-when a contractor takes on more jobs than their organization can efficiently handle
-overextension in a contractor's aggregate work program usually occurs when an
abundant amount of work is available to bid on
✔✔Financial overextension - ✔✔begins when a contractor must put cash into projects
at a higher rate than that at which cash is being generated.
✔✔continuity - ✔✔-losses because of an owner's death or disability
-the new management team should be capable, qualified, and experienced in the field
-A contractor should start succession planning early in the development of the business
✔✔Subcontractor Failure - ✔✔- a critical subcontractor's impairment or failure can
seriously disrupt and delay a construction project
, -sureties often require that contractors bond their major subcontractors
✔✔Nonpayment by owner/obligee - ✔✔-anything that reduces cash flow can have a
serious effect on the firm
✔✔what are some events that can result in nonpayment by an owner....? -
✔✔insufficient project financing, failure of the bank making the construction loan, failure
of the owner, failure in the contractor's performance, unclear contract specifications,
significant change orders, disputes between owner and contractor
✔✔sole proprietorship - ✔✔A form of business in which one person owns the business
assets and is personally liable for the business's debts
✔✔partnership - ✔✔A for-profit business entity jointly owned by two or more persons
who share ownership and profits (or losses), although not necessarily on an equal basis
✔✔General partnership - ✔✔A partnership in which each partner assumes unlimited
joint liability for all the partnership debts
✔✔limited partnership - ✔✔A form of partnership made up of one or more general
partners, who have unlimited liability, and one or more limited partners, whose liability is
limited to the amount of capital they have contributed to the partnership.
✔✔corporation - ✔✔An entity organized under law and entitled to the same rights as a
person, distinct from its owners
✔✔promoter - ✔✔a person who brings a corporation into being
✔✔articles of incorporation - ✔✔a document prepared during the formation of a
corporation stating the corporation's goals and objectives and the kind of business for
which the corporation was organized
✔✔shareholder - ✔✔an individual owner whose liability is limited to his or her
investment in the corporation
✔✔Subchapter S Corporation - ✔✔A small business corporation restricted to no more
than 100 stockholders that elects to be taxed under subchapter S of the Internal
Revenue Code. A Subchapter S corporation provides limited liability to its owners and
tax treatment similar to that of a partnership. Profits, losses, and other tax items are
passed through to the shareholders and are taxable to them on their individual returns
✔✔Merger - ✔✔A type of acquisition in which two or more business entities are
combined into one
SOLUTIONS RATED A+
✔✔What are the considerable differences between public and private work ....? -
✔✔Bid-list qualifications, Criteria for selecting winning bids, Amount of collaboration
among the contractor, the owner, and others, Quality of work expected and delivered,
Amount of change assumed in the bid or separately contracted for during construction
✔✔Key-Personnel Replacement - ✔✔-one of Schleifer's elements of risk
-the efforts of key personnel are generally responsible for a company's profitability.
-the loss of a profitable top manager can put a construction company at risk until a
suitable replacement is found
✔✔what are the three primary functions of a successful construction firm....? - ✔✔1)
estimating and sales (getting the work)
2) Construction operations (doing the work)
3) Administration and accounting (managing the work)
✔✔Managerial Immaturity - ✔✔-The last element of Schleifer's risks
-managerial maturity refers to the need for a contractor's managerial abilities to mature
as the business does.
-At some point in the growth of every company, the organization must change. an
organization may need more delegation of authority , more-complex systems and
procedures, and more sophisticated personnel to handle them.
✔✔What are the other factors associated with contractor failure....? - ✔✔overextension
continuity
subcontractor failure
nonpayment by owner/obligee
✔✔Overextension - ✔✔-when a contractor takes on a much larger job than it previously
had
-when a contractor takes on more jobs than their organization can efficiently handle
-overextension in a contractor's aggregate work program usually occurs when an
abundant amount of work is available to bid on
✔✔Financial overextension - ✔✔begins when a contractor must put cash into projects
at a higher rate than that at which cash is being generated.
✔✔continuity - ✔✔-losses because of an owner's death or disability
-the new management team should be capable, qualified, and experienced in the field
-A contractor should start succession planning early in the development of the business
✔✔Subcontractor Failure - ✔✔- a critical subcontractor's impairment or failure can
seriously disrupt and delay a construction project
, -sureties often require that contractors bond their major subcontractors
✔✔Nonpayment by owner/obligee - ✔✔-anything that reduces cash flow can have a
serious effect on the firm
✔✔what are some events that can result in nonpayment by an owner....? -
✔✔insufficient project financing, failure of the bank making the construction loan, failure
of the owner, failure in the contractor's performance, unclear contract specifications,
significant change orders, disputes between owner and contractor
✔✔sole proprietorship - ✔✔A form of business in which one person owns the business
assets and is personally liable for the business's debts
✔✔partnership - ✔✔A for-profit business entity jointly owned by two or more persons
who share ownership and profits (or losses), although not necessarily on an equal basis
✔✔General partnership - ✔✔A partnership in which each partner assumes unlimited
joint liability for all the partnership debts
✔✔limited partnership - ✔✔A form of partnership made up of one or more general
partners, who have unlimited liability, and one or more limited partners, whose liability is
limited to the amount of capital they have contributed to the partnership.
✔✔corporation - ✔✔An entity organized under law and entitled to the same rights as a
person, distinct from its owners
✔✔promoter - ✔✔a person who brings a corporation into being
✔✔articles of incorporation - ✔✔a document prepared during the formation of a
corporation stating the corporation's goals and objectives and the kind of business for
which the corporation was organized
✔✔shareholder - ✔✔an individual owner whose liability is limited to his or her
investment in the corporation
✔✔Subchapter S Corporation - ✔✔A small business corporation restricted to no more
than 100 stockholders that elects to be taxed under subchapter S of the Internal
Revenue Code. A Subchapter S corporation provides limited liability to its owners and
tax treatment similar to that of a partnership. Profits, losses, and other tax items are
passed through to the shareholders and are taxable to them on their individual returns
✔✔Merger - ✔✔A type of acquisition in which two or more business entities are
combined into one
