Budgeting Hours Question

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Christopher Boucher

February 16, 2021 17:40

This is a question from Architect Exam Prep's exam simulator. Is this the right way to calculate this problem? Isn't it standard practice to divide by the complement to 18%?

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  Alison Chen February 17, 2021 01:22

  Isn't dividing by the complement (inverse?) of 18% the same as multiplying by 18%? 

  Not certain if I am answering/understanding your question, but hopefully that helps!

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  David Gaied February 17, 2021 04:06

  I think it depends on are you going to calculate the profit before or after taking the engineering fee out

   

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  Gang Chen February 17, 2021 04:42

  David has a very good point. AHPP page 440 has an example that clearly defines Net Operating Revenue (NOR) and Net Profit, and is much less confusing. Real ARE exam questions are more like the AHPP examples and will define clearly what the question is asking for.

  Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

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  Christopher Boucher February 17, 2021 21:38

  Thanks, Valerie!

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  Gang Chen February 18, 2021 16:17 (Edited February 18, 2021 16:17)

  I have a different opinion. Since the total fee is $250,000, without very specific definition, most people would think the profit is 18% of the total fee, NOT 18% of only the arch portion.

  1. Design fee = $250,000 = 100%
  2. Engineers = $250,000 x .25 = $62,500
  3. 18% profit: $250,000 x .18 = $45,000
  4. Project labor budget = $187,500
  5. $250,000 - $62,500 - $45,000 = $142,500
  6. $142,500 / $75 = 1,900

  Since every ARE question has been beta tested, I do NOT think any ARE question can be as confusing as it is worded in this question, otherwise, it would have been thrown out or completely modified to be less confusing.

  Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

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  Gang Chen February 18, 2021 19:09

  $187,500 is the Net Operating Revenue. It should have been clearly defined in the question.

  Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

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  Kimberly Orrego February 25, 2021 01:49

  Thank you Valerie and Gang for going in depth on this question.

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  David Dante June 22, 2021 21:12

  Great!

  So what is the correct answer and how did you get there?

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