Practice Question: Utilization Rates

ARE 5.0 Project Management (PjM) Practice Question on firm utilization rates.

Utilization Rates are an important part of how firms track the hours spent on direct versus indirect labor, and are considered one of the 7 Key Financial Performance Indicators for architecture firms. I created this practice problem using the concept and real ways that it might change over time. Hyperfine is a great resource for practice questions and examples on both practice and project management concepts, as part of their Financial Formulas Workbook and their ARE 5.0 Courses.

Here’s a video of them going through a set of utilization rate questions.

Practice Question: Utilization Rates

The image below shows the salaries and utilization rates for the previous year for SKY Architects.

The salaries and utilization rates for this year are expected to be exactly the same, with the following changes:

  • Baboucar will be on paid paternity leave for 3 months
  • Yandeh will only be working part-time to pursue her graduate degree in historic presentation. Her utilization rate will be cut in half.

With these changes in mind, calculate the following:

  1. Estimated annual direct labor budget
  2. Yandeh R.’s estimated annual direct labor hours

Correct Answers

Question 01

In order to calculate the estimated annual budget we first need to calculate the direct labor budget for each member of staff:

  • Samuel: $170,000 * 0.5 = $85,000
  • Jeoffrey: $60,000 * 0 = $0
  • Yandeh: $90,500 salary, utilization rate = 0.8 * 0.5 = 0.4, so Yandeh’s direct salary this year will be $90,500 * 0.4 = $36,200
  • Fatou:$90,500 * 0.9 = $81,450
  • Baboucar: $70,000 salary, but he will only be working for 9 months out of 12, so we calculate 9/12 of his salary or 75%. So $70,000 * 0.75 = $52,500. With a consistent utilization rate of 0.9, his direct salary is $52,500 * 0.9 = $47,250

If we add up all of these direct salaries, we get $249,900.

Question 02

In order to calculate Yandeh’s estimated direct labor hours, we first need to determine hours per year. The number of hours in a year is 2080. Her current utilization rate is 80% but with her new graduate program, her utilization rate is reduced to 40% for this year.

So we would calculate 2080 hours * 0.4 = 832 direct labor hours this year.


Let me know how you did on this question, and make sure to follow RMSM Studios on Facebook and Instagram! Feel free to look through my blog for additional PjM Practice Questions and Mini Quizzes. You can search by tags, or by categories. If you have any questions, or you want to tell me how you did, leave a comment on the blog or on my Facebook page.

One Minute Review: Walking the ARE 5.0 PcM Practice Exam

Can the Walking the ARE 5.0 Practice Exam help you pass the ARE 5.0 Practice Management (PcM) exam? Find out in 60 seconds!

This blog post is part of my One Minute Reviews, where each study material review can be read in a minute or less.

Some of the links in this post are affiliate links. This means if you click on the link and purchase the item, I will receive an affiliate commission at no extra cost to you. All opinions remain my own.

Walking the ARE 5.0 PcM Practice Exam Review

Can the Walking the ARE 5.0 Practice Exam help you pass the ARE 5.0 Practice Management (PcM) exam? Let’s break it down.

Question Content

Content for this practice exam comes from the AHPP, the AIA contracts, and professional codes of conduct. It has a large variety of question types, which are similar to the format you would find on the actual exam. Though it doesn’t highlight the specific exam sections, it covers all the topics required for PcM.

Difficulty of Questions

I took this exam a day before my exam, after studying for months, and I can tell you I was floored. These questions are hard! However, no other practice exam made me feel as prepared for the question style and complexity of the real ARE exam.

Ease of Use

This exam comes in a PDF format that is easily printable or visible on any device. The exam creator, Erik Walker, recommends printing out the answer sheets so you can refer to them as you take the test. This is meant to be a timed test, so be ready with your timer, too.

Price Point

For One Exam: $39. Includes questions and answer sheets with very detailed explanations.

Compared To similar Materials

Hyperfine Architecture PCM/PJM Study Questions: The Walking the ARE question difficulty is higher, however the answer section for the Hyperfine products is very comprehensive, and includes external references to articles, videos and documents that can explain the material in greater detail. Both of these packages are available as PDFs, with no timing or grading integrated into the format.

CONCLUSION

I highly recommend this exam, as I truly don’t believe I would have passed my PcM exam without it. If you use this resource not just as a practice exam, but as a tool to double down on your gaps in knowledge, you will be in great shape come exam day.


Disagree with my assessment, or have a product you want me to review, or have additional questions? Leave a comment below!

One Minute Review: Designer Hacks ARE 5.0 Courses

This blog post is part of my One Minute ARE 5.0 Study Material reviews. Architecture professionals are busy people, and I wanted to neatly package each product review so that they could be read in a minute or less. Disagree with my assessment, have a product you want me to review, or have additional questions? Leave a comment below!

Now, without further ado:

Designer Hacks ARE 5.0 Course Review

Can Designer Hacks ARE 5.0 Courses help you pass the ARE 5.0 Practice Management (PcM) exam? Let’s break it down.

Question Content

Content for these practice exams comes from the AHPP, the AIA contracts, and professional codes of conduct. Grading for the quizzes also shows you how you performed relative to the NCARB content categories for the exam.

Difficulty of Questions

If you can’t do well on these very straightforward questions, you will definitely struggle in the exam. So if you just started studying, I would highly recommend getting these to test your knowledge of basic concepts.

Ease of Use

These practice exams come in a digital format that is easy to use in both desktop and mobile format. There are 3 exam formats, which allow you to study based on how much time you have available. Grading is automatic when you finish, but question answers may not be very detailed. The course maintains a record of your exam results over time so you can check your progress.

Price Point

For One Exam Section: $39. For All 6 Exams: $195

Compared To similar Materials

Hyperfine Architecture PCM/PJM Study Questions: These questions cover 2 exams instead of one, and are cheaper than the cost of a single exam section with Designer Hacks. Hyperfine question complexity is higher, and provides greater detail and resources for their answer sections. However, this is only available as a PDF package, with no timing or grading integrated into the format.

WEARE Practice Exams: Much closer to the exam in terms of complexity, and cheaper at both the individual exam and all-in-one bundle levels. Allows for grading and has 2 full practice exams. and 1 case study.

CONCLUSION

If you are just starting to study for this exam, I would recommend this resource to help you reinforce the concepts you are just beginning to learn. It’s very good for on-the-go studying, and allows you to check your progress over time.