Download CAI Exam Prep: Flashcards with Key Questions and Answers for Success and more Exams Business Administration in PDF only on Docsity!
CAI Exam Flashcards Questions and
Answers That Predict Success
Which of the following investment objectives for community associations refers to the ease with which an investment cant be converted into cash or a cash equivalent?
A. Safety
B. Liquidity
C. Yield
D. Treasury Bills - Correct Answer ✔️ ✔️ B. Liquidity
Define facilities management - Correct Answer ✔️ ✔️ The process of
operating, maintaining, repairing, and replacing common property -- that is, the common elements or areas.
What are the four major maintenance goals of a community association: - Correct Answer ✔️ ✔️ 1. Meet the needs or the individual residents as they
relate to the community association's responsibilities.
- To preserve and enhance the common property.
- To limit potential exposure to injury to residents, guests, and employees.
To protect property values of the homes or units through successful maintenance of the common property.
What is a management tool? - Correct Answer ✔️ ✔️ Any means used to track, record, remind, or command attention. Usually these are forms or documents.
What are a few examples of management tools? - Correct Answer ✔️ ✔️ -
Checklists
-Charts of Information
-Calendars or schedules
-Inventories
-Computer generated work orders
How do you determine maintenance responsibilities? - Correct Answer ✔️ ✔️
- Review the governing documents for specifics
- Review state statutes
expectancy of eight years every five years, and cleaning problem sewer lines every month to avoid backups. *Literature from the manufacturer is one of the best sources of information on preventive maintenance for equipment.
Define emergency services - Correct Answer ✔️ ✔️ This is the ability to respond to unpredictable problems (ex. sewer backups, elevator failures, roof leaks, frozen pipes, etc).
Define requested maintenance - Correct Answer ✔️ ✔️ This is maintenance
requested by an owner, a tenant, or the board, or recommended by a contractor, or identified during a routine site visit of the property.
Define reserve replacement - Correct Answer ✔️ ✔️ This consists of
replacing the physical assets as they wear out or break. The basis for your reserve replacement is the reserve study and replacement fund budget.
Complete the following sentence: For a community association, _____________________________ is the process of operating, maintaining, repairing, and replacing common property.
A. Preventative maintenance
B. Facilities management
C. Maintenance record
D. Scheduled replacement - Correct Answer ✔️ ✔️ B. Facilities management
True or False. One of the goals of maintenance for a community association is to limit injury to residents, guests, and employees. - Correct Answer ✔️ ✔️
True.
Each of the following includes steps in establishing a maintenance system for a community association EXCEPT:
A. assign blame to staff not adequately fulfilling maintenance responsibilities
B. develop maintenance management controls
C. analyze your assets' maintenance needs
D. evaluate your maintenance system and efforts - Correct Answer ✔️ ✔️ A. assign blame to staff not adequately fulfilling maintenance responsibilities
Which of the following is NOT an example of a maintenance management control?
B. requested or corrective maintenance
C. routine maintenance
D. preventive maintenance - Correct Answer ✔️ ✔️ D. preventive
maintenance
True or False. Surveying residents is a common method community association managers use to evaluate their maintenance systems and implementation efforts.
- Correct Answer ✔️ ✔️ True
Define request for proposal (RFP) - Correct Answer ✔️ ✔️ an announcement that an organization is interested in receiving proposals for a particular project.
Define warranty - Correct Answer ✔️ ✔️ Promise or guarantee that parts,
materials, or labor will last for a designated period of time.
What is assignability in terms of the legal binding of a contract? - Correct
Answer ✔️ ✔️ This provision states that neither party may assign its obligations under the contract to any other person without the express written consent of the other party. The contract should specifically state that the contractor cannot use subcontractors without the express written consent of the association.
What is contractibility in terms of the legal binding of a contract? - Correct
Answer ✔️ ✔️ This provision states that the contract may not be modified in
any way unless such modification is written and signed by both parties.
What is the waiver in terms of the legal binding of a contract? - Correct Answer
✔️ ✔️ This provision states that a waiver (permission) by one party of any
breach of contract (failure to fulfill provision) by the other party shall not act as a general waiver of future breaches.
What is the governing law in terms of the legal binding of a contract? - Correct
Answer ✔️ ✔️ This provision states that the law of a particular state will be
applied if there are any disputes about the contract after it is signed. This is particularly useful when the community association and the contractor are based in different states.
What is severability in terms of the legal binding of a contract? - Correct Answer
✔️ ✔️ This provision states that if a court finds that nay clause of the contract
is illegal or unenforceable, that clause shall be severed (separated) from the rest of the contract, so that the whole contract need not be invalidated.
- Present the initialed version of the contract signed by the contractor's representative to the authorized community association representative for his or her initials on any changes and signature on the contract.
- Give the contractor and the board copies of the contract signed by both parties.
True or False. A contract is an agreement between two or more parties, enforceable by law, by which each party promises to do, or not to do, something.
- Correct Answer ✔️ ✔️ True.
When deciding whether to have staff members or a contractor perform a task, a manager should consider each of the following EXCEPT:
A. supervision
B. Expertise
C. number of people
D. retirement plan contributions - Correct Answer ✔️ ✔️ D. retirement plan contributions
True or False. When deciding whether to have staff members or a contractor perform a task, a manager should consider where tools, equipment, and supplies will be stored, and the liability involved. - Correct Answer ✔️ ✔️ True.
A bid request or request for proposal (RFP) should include each of the following EXCEPT:
A. vague instructions about the products or services requested
B. a request for information about the contractor that will help the association evaluate the contractor's ability
C. information about the association that the contractor will need in order to prepare for a bid
D. information about work conditions - Correct Answer ✔️ ✔️ A. vague
instructions about the products or services requested
True or False. The bidding process and requests for proposals should be used primarily for smaller jobs or purchases of one-time services. - Correct Answer
✔️ ✔️ False.
A. indemnification
B. standard of performance
C. restoration
D. compensation - Correct Answer ✔️ ✔️ C. restoration
Complete the following sentence: A ______________________________ is a guarantee by a surety (a third party) to protect the community association if the contractor fails to perform or finish the work.
A. payment bond
B. default
C. performance bond
D. waiver of lien - Correct Answer ✔️ ✔️ C. performance bond
True or False. The manager should sign all contracts on behalf of the community association - Correct Answer ✔️ ✔️ False.
There are four types of sudden, accidental and unexpected loss to which a community is exposed, they are: - Correct Answer ✔️ ✔️ 1. Property
exposure to loss
- Liability exposure to loss
- Income exposure to loss
- Personnel exposure to loss
Property exposure to loss: - Correct Answer ✔️ ✔️ Can be tangible
community association property (buildings, contents, etc.) or to intangible association property (information, proprietary website, etc.)
Liability exposure to loss: - Correct Answer ✔️ ✔️ Liability losses include
damage to non-association property or to a person, and arise when a person or entity threatens or actually brings a legal claim against the community association, its members, or others whom it must indemnify by contract (such as management company)
Income exposure to loss: - Correct Answer ✔️ ✔️ Income losses involve a
reduction in income or an increase in operating expenses, or both.
What is segregation of exposures? - Correct Answer ✔️ ✔️ This involves
establishing some type of backup to prevent a loss, such as backing up all computer files and storing the backup files offsite in a separate place, or keeping a hard-to-replace mechanical part on hand.
What is contractual transfers? - Correct Answer ✔️ ✔️ This involves entering
into a contract that will, among other things, transfer the community association's legal responsibility for any loss. An example would be contracting for landscape services, instead of using community association employees, and incorporating clauses such as a hold harmless provision in the contract, or the association contracts with a community association management company.
What does insurance do? - Correct Answer ✔️ ✔️ This transfers the financial
burden of paying for certain losses to a third party -- a commercial insurance company. Not all exposures to loss may be covered by insurance.
What are the four types of primary types of insurance coverages that addressed the four types of possible exposure to loss? - Correct Answer ✔️ ✔️ 1.
Property
- Liability
- Income
- Personnel
What is a special form? - Correct Answer ✔️ ✔️ This is the most
comprehensive and insures against everything that is not excluded. It places the burden of denying a property claim on the insurance company.
What is a broad form? - Correct Answer ✔️ ✔️ This only insures specified
perils. The places the burden of proving coverage on the association.
What is a basic form? - Correct Answer ✔️ ✔️ This provides the least property coverage. It also places the burden of proving coverage on the association.
What is the Commercial Package Policy Insurance (CPP)? - Correct Answer ✔️
✔️ There are two parts: liability and property. The property insurance part of the CPP can provide coverage for real and personal property. The most comprehensive property coverage is obtained through the "Special Form Covered Causes of Loss" insuring agreement.
- Demolition
- Increased cost of construction
What is contingent liability? - Correct Answer ✔️ ✔️ This covers the value of
any undamaged portion of a building which may have to be replaced because it is impossible to tie in the remaining section to the rebuilt section because of changes in building codes over the years.
What is demolition? - Correct Answer ✔️ ✔️ This covers the cost of
demolishing any undamaged portion of the building. The basic property insurance pays for demolishing the damaged portion of the building.
What is increased cost of construction? - Correct Answer ✔️ ✔️ This covers
construction costs due to changes in the building code since original construction took place, e.g. wider door frames, installation of sprinkler systems, and code changes because of "green requirements" such as reflected roofs, complying with water saving specifications, etc.
What is the purpose of flood insurance? - Correct Answer ✔️ ✔️ This type of
insurance is only available through the National Flood Insurance Program (NFIP), a federal insurance program, if a building is in a flood plain. It provides coverage for
damage caused by flood and mudslides to buildings and contents. Policy limits are driven by the internal requirements of the NFIP. The NFIP program is predicated on the association insuring to full insurable replacement cost or a maximum of $250,000 per unit.
What is electronic data processing (EDP)? - Correct Answer ✔️ ✔️ This insurance may be needed for computer equipment, networks, websites, security systems, protection from hackers, and similar information technology exposures. Coverages may vary so much that the community association needs to carefully evaluate its exposures and the ability of the EDP to meet those potential exposures to loss.
What is coinsurance? - Correct Answer ✔️ ✔️ This is a standard element in
most property policies that obligates the insured to maintain a certain amount of property insurance on the entire property or per structure, based on a stated percentage, usually 80%-90%. If the insured will not be reimbursed for for the full loss of the property.
What is the deductible? - Correct Answer ✔️ ✔️ This is the amount that the
association or homeowner must pay on each loss. These can be split between
