What to Study for the Practice Management Exam

So, you have decided to take the Practice Management exam of the ARE 5.0. Whether this is the first ARE you're taking, or if it will be your last, this blog will detail what elements you need to study for this specific exam.

Let's begin with an overview of the Practice Management (PcM) Exam. This exam is the shortest of the six divisions at 80 questions and 2 hours and 45 minutes long. Although this division is the shortest, it isn't necessarily the easiest. Since this exam focuses on the business operations side of architectural practice, the subject matter can be very unfamiliar to a lot of young ARE candidates. Fortunately, the concepts are really quite simple once you get into it but be prepared to feel a little lost at first.

As you begin to formulate your study plan, always start by reviewing the assessment sections outlined in NCARB's ARE 5.0 Handbook¹. This document is a vital study resource and provides all sorts of useful information about exam objectives and content. NCARB breaks down each exam into a series of key sections or subject areas covered by the exam. Key objectives are then also listed for each section. Although there are so many study resources out there, it is best to review the ARE 5.0 Handbook first, so you get an overview direct from the exam source. For each objective, NCARB assigns a "level of understanding" they are expecting which is either Understand/Apply (U/A) or Analyze/Evaluate (A/E). "Analyze/Evaluate" signifies that you will need to demonstrate a deeper understanding of the objective by integrating it with other information or applying it to uncommon situations. It is a good idea to take a look at which objectives NCARB designates Understand/Apply (U/A) or Analyze/Evaluate (A/E), but personally, I did not find the distinction particularly helpful when I was studying. Studying an objective only to the "Understand/Apply" apply level is, in practice, a hard cutoff to achieve. In general, it is best to study each objective to the best of your ability rather than trying to go by these "understanding levels."

We will dive into each of these sections in detail, but it is important to note that the "expected number of items," meaning the number of questions NCARB plans to have in each that assess each subject section, are fairly evenly distributed for this exam. Some exams have a section that is much more prominent, but for Practice Management, there is not really a definitive focus, so you'll need to have a good handle on all of the sections.

Section 1: Business Operations

Expected Number of Items: 16-21

Target Percentage: 20-26%

This section focuses on how the business side of an architectural practice is run. This section focuses on staffing, regulations, and business ethics.

Key Study Resources: The Architect's Handbook of Professional Practice (the much cheaper Student Edition had everything I needed) and The AIA Code of Ethics and Professional Conduct

Objectives:

1. Assess resources within the practice

This objective can simply be thought of as "staffing," which means you will need to be able to determine the number of staff a practice requires (or what workload current staffing can support) and understand how staff assignments are determined. Other aspects of staffing include hiring and evaluation protocols, professional development, and scheduling.

2. Apply the regulations and requirements governing the work environment

Part of running a business is understanding the applicable laws, regulations, and insurance of that field. Most of these are similar to any professional services business, such as health insurance, worker's compensation, and labor laws. However, liability insurance is an especially important protection for architectural practices in case of any litigation down the line, so be sure to study that carefully.

3. Apply ethical standards to comply with accepted principles within a given situation

This objective is the same as the next objective in the list but focuses on ethics in professional practice. I remember being quite confused that I would be evaluated on ethics, but business ethics are a key aspect of any professional practice, and it is really important to understand how to manage various complex situations that can arise. Be sure to read the AIA Code of Ethics and Professional Conduct.

4. Apply appropriate Standard of Care within a given situation

The professional "Standard of Care" is the legal notion that as a licensed professional, you must perform your duties to the same baseline level that would be expected of another licensed professional in your field. The "Standard of Care" exists so that general expectations of an architect are clear. If an architectural practice is following the Standard of Care, they can function as a legal defense. As a simplified example, imagine that a client is unhappy with the way the final "look" of their tile kitchen backsplash, but they approved the tile selection, it was an appropriate specification, it was installed correctly by the contractor, then the Standard of Care was followed and neither the architect nor the contractor is responsible for the client's disappointment. These examples can get complicated, but the Standard of Care is a particularly important concept that underlies all six divisions, so it is best to study it in depth.

Section 2: Finances, Risk, & Development of Practice

Expected Number of Items: 23-28

Target Percentage: 29-35%

This section covers a very wide range of topics from finances, risk, and liability to negotiation and contracts. Since this exam covers aspects of accounting, law, ethics, and business management, it is really important to keep in mind that you aren't expected to be an expert in each subject area. You really just need to have a solid baseline understanding of all the objectives.

Key Study Resource: The Architect's Handbook of Professional Practice

Objectives:

1. Evaluate the financial well-being of the practice

This objective can be understood as business accounting and financial planning. This is such an important aspect of running a business that it is crazy it's really only covered by one objective. Nevertheless, business finances massively important so be sure to have a good understanding of this topic.

2. Identify practice policies and methodologies for risk, legal exposures, and resolutions

For this objective, you will need to understand what risks are associated with various project types, clients, and contract terms, and what can be done to mitigate those risks.

3. Select and apply practice strategies for a given business situation and policy

This objective is pretty vague, but you will need to understand how contract terms and project scopes can impact your business, and therefore when you can be flexible and when you need to be tough in negotiations.

Section 3: Practice-Wide Delivery of Services

Expected Number of Items: 17-23

Target Percentage: 22-28%

This section is about how you determine if a new project is right for your practice, getting a baseline understanding of what it will entail, and how the contract should be set up. There are many ways a project can be executed so you must understand the various "Delivery Methods" available and be able to determine which is most applicable to a project.

Key Study Resource: The Architect's Handbook of Professional Practice

Objectives:

1. Analyze and determine response for client services requests

After a client requests architectural services (which can be a very formal or informal process) you need to be able to assess what they are requesting, ask appropriate questions, and determine what fee you will charge them.

2. Analyze applicability of contract types and delivery methods

You will need to understand the various typical contract types and delivery methods so that you can analyze the risks/rewards and determine which type is best for the project.

3. Determine potential risk and/or reward of a project and its impact on the practice

Similarly, this objective looks at analyzing the risks/rewards of a specific project to determine if you should take it on and if you need to take measures to mitigate specific risks.

Section 4: Practice Methodologies

Expected Number of Items: 13-18

Target Percentage: 17-23%

This shorter section focuses on the various ways a business can be formed legally, and how a practice is internally structured.

Key Study Resource: The Architect's Handbook of Professional Practice

Objectives:

1. Analyze the impact of practice methodologies relative to the structure and organization of the practice

For this objective, you'll need to be able to determine what legal structure is best for a given practice situation.

2. Evaluate design, coordination, and documentation methodologies for the practice

This objective has to do with the output (documentation) that will be expected and how to establish a practice framework to get you there. A lot of this has to do with Quality Control procedures to make the practice's output is high quality.

I remember feeling a little overwhelmed by the broad swath that is covered by this exam, but it is important to keep in mind that NCARB is not expecting you to be fully fledged MBA, lawyer, accountant, and ethicist. While this exam covers a wide range of topics, you aren't expected to be an expert in each of them. The key is to have a clear understanding of what the expectations of licensed architects are. When studying for this exam, always keep the Standard of Care concept in mind.

Reference

¹ https://www.ncarb.org/sites/default/files/ARE5-Handbook.pdf.