Proprac 413 final exam

many terms for the final exam fall 2025

Specification

Specification

written instructions to contractors & vendors concerning the materials and methods of construction or the products that are to be bid on

Fixed Asset (PP&E)

Long-lived items or resources used by the firm

Limited Liability Company (LLC)

Hybrid of Sole Practioner, general partnership & corporation. Made in 1980s. Business formation great for interior design companies. One owner, must use this title in company name. Personal assets are protected, and members are not liable

Joint venture

2+ people agree on temporary basis to share responsibilities, losses & profits. The group is formed with a new name and the partnership ends after the project is completed. This requires the agreement is very clear.

S Corporation

Not used much because of LLC - Similar formation to a corporation. It uses many benefits of a corporation but doesn’t pay corporation taxes. Provides liability protection and less taxes.

Limited Liability Partnership (LLP)

Provides all owners with limited personal liability. This is great for lawyers and accountants and professional groups.

Professional Corporation (PC/PA/PSC)

Only professionally licensed or legally authorized services can use this title. Firm name needs name in it. Tax liability is often higher, and shareholders are all liable to clients but are personally liable.

C Corporation (AKA Corporation)

An association of individuals created according to statutory law as a separate legal entity. This business takes more time and money to develop but has advantages with legal protection. This is the default option.

NCIDQ/CIDQ ([National] Council for Interior Design Qualifications)

The premiere certifying interior design organization. It has three tests to show the competency of interior designers and requires these to be certified

Contract

A promise or agreement between 2 or more parties for performing or not performing an act. This is legally binding and can enforced by law if not followed

Revenue/Income

Inflows from sale of goods or services during a certain period of time

Bidding

An offer of money that one would pay for goods or services. This would be the final price. Is not an estimate

Submittal

Materials, documents or drawings that a vendor may have to provide to a designer or contractor for approval

Registration/Certification

Legislative that defines who can use certain titles

Transmittal Letter

A short letter that accompanies a larger group of documents sent to anyone involved in a project in order to summarize the information attached. Usually is not seeking revisions, and is sent for recording or documentation purposes.

Value Engineering

Analyzing building features, systems, equipment and materials selections to reduce costs but still create with the required performance, quality, reliability and safety for the project

Design Proposal

Overview or response to a request for proposal from a client. Not necessarily (but can be) a contract

Short Term goals

a goal set with timeline between 6 months and 3 years

Long Term goals

a goal set with timeline between 3 and 6 years

Trade discount

A discount from vendor to designer and other similar trades. Is usually a small percentage off of retail price

Liability insurance

This torte law protects business should the business be sued by a third party for injury or property damage due to negligence, product failure or similar claims.

Income statement (profit and loss statement)

An accounting document that formally reports all revenues and expenses of a firm for a stated period of time. The results will show the net income or losses (profitability) during the stated period.

Employee Benefits (Fringe benefits)

Direct or indirect additional payments made to an employee for the work they performed. (ex. paid vacation, profit-sharing plans, group health insurance)

Reimbursable Expenses (disbursements)

costs that are not directly a part of the design contract but are gained in the interest of completing the project. (ex. travel costs)

Accounts Payable

Claims from suppliers/vendors for goods or services that have been ordered but not yet paid for

Change Order

written permission/instructions concerning any aspect of modification in design concept, construction design or product specs.

Employee Contract

Specifies conditions of employment between designer and employer as well as special perks and benefits

Cash Accounting

Revenue & expense items are recognized by the business when the money is actually recieved or paid

Bonus pay

additional compensation for an employee based on them creating more than their specified personal quota (going above and beyond)

Accrual method

When revenues and expenses are recognized by the business when they are earned or incurred, whether or not it has actually been collected

Flat/fixed Fee (lump-sum method)

One overall price for all services or products in a project. Can be paid in increments or all at once.

Pro bono

no charge

Kickback

Money or other incentives offered in return for a favor done between two parties

Keystone

50% discount from suggested retail price

Gross Income

All of the income generated by a firm before any deductions (ex. taxes)

Feasibility Study

In depth estimates of the planning and specs needed for a project

Certificate of Occupancy (CO)

Document provided by local building department that states the owner can now legally move in after construction is complete

Cost Plus Fee

Adding a percentage to the product cost for a rate of return (income)

Request for Proposal (RFP)

Includes submit fee, schedule scope, demostrate expertise/experience, meet clients & interview team with contractor/others as needed

Request for qualifications (RFQ)

Includes staff expertise, insurancy/liability, experience in related work and interest in work

Request for information (RFI)

Includes firm name, organization, staff, locations & design specialties

DBA (Doing business as)

The filing required when the name of a business is different from the owner’s

Who should you report to to sign off on your hours for NCIDQ certification?

A design professional with AT LEAST one of the following: 1. NCIDQ certified interior designer 2. State/Provincial licensed/registered/certified interior designer in US or Canada 4. State/Provincial licensed/registered/certified architect in US or Canada that provides interior design services.

Accounts receivable

What others owe to a firm as a result of the firm selling or billing them for the firm’s goods and/or services

Balance sheet (statement of financial position)

An accounting statement that shows financial position of a firm at a specific time period. This includes statement of assets, equity & liabilities.

Statement of Cash flow

An accounting statement that reports changes in operating, investing & financing activities for a certain period of time.

Reciprocity

A statutory agreement that allows someone who is licensed in one jurisdiction to work in another (ex. someone that is a licensed interior designer in one particular state is able to work in another state without that state’s specific license.)

Statement of Equity

Accounting statement that states the amount of money stakeholders have in the business and the changes in that money amount.

Recommendation letter ( reference letter)

A letter where the writer evaluates the abilities and skills of an individual for the individual’s admission to school, job, or other professional position.

Competitive quoting

Looking at quotes from several suppliers and deciding which one to buy based on the best price, quality, or time to deliver (based on estimates)

SWOT analysis

Identifying a businesses or your own strengths, weaknesses, opportunities and threats to make yourself or a business better.

Hourly fee

Client pays by the hour worked. Very common type of fee.

Consultation fee

A fee for the first meeting prior to creating a contract. Can often be reimbursed by signing a contract for the project. Primarily for residential. Makes sure if the client does not proceed that you are paid for your time with them.

Retail Design Fee

Variant of cost-plus, has designer fee built into the cost. The designer pays their net price for the product, gives client the retail price and the designer keeps what is left. (Retail - net = designer income)

Patent

Exclusive rights to the inventor or assignee for a limited time in exchange for the public knowledge of item. It can be a product, process or solution to a problem.

Trademark

A recognizable sign, design, or expression that identifies product or service of a particular source from other sources. The owner can be an individual, an organization or a legal entity. This will be on packaging, labels, or on the product itself

Copyright (“Right to Copy”)

Legal concept - it gives the creator exclusive rights (usually for a limited time) with intention of intellectual wealth so that the creator is compensated for their work. Requires other give credit

Limited partnership

More expensive than the other option. One general manager, other managers are limited. Others provide assistance to firm. The general manager is responsible. They will share in profit but not risks.

General Partnership

2+ people join to form a business and equally share profits and risks. They have shared responsibilities and balance skills & assets. Personal assets of partners are liable. If one partner dies, the business dissolves. All owners are responsible to each other.

Sole Proprietorship

Least expensive option, hard to sell to people, and financing come from the personal savings of the business owner. They have personal responsibility for both legal and financial liability and pays self-employment taxes

Turn-key

 involves one fee for all of the design work, materials, and furnishings for the project - doesn’t include labor costs

Proprietary Specification

Names the products and materials by manufacturer's name, model number, or part number. No substitutions

Descriptive Specification

Does not use a manufacturer’s name or trade name for the goods specified. Describes the materials, workmanship, fabrication methods, and installation required 

Performance Specification

Written without exact names. Establishes the product requirements based on performance criteria needed. Can require certain tests to be done on materials/items

Reference Specification

Utilizes an established standard. Generally, provides minimal acceptable standards of performance for various kinds of products. Open bid

Consumer Protection

Copyright law that helps ensure consumers are accessing genuine products

What should be added into a contract with a flat fee

Not to exceed hourly rate

Performance Evaluation

Positive and negative work efforts of the employee

Financial accounting

Day to day & periodic measurement and reporting of a firm’s monetary resources

Transactions

events that affect the finances of a firm, either revenue or expense

Competitive bidding

The process where a client compares the final prices of multiple products from contractors or vendors to find the best option as needed for the project. The documents for the process are prepared by a design professional