South Carolina Contractor License Exam — All Questions

Since 2023 (Act H.4115), a South Carolina commercial general or mechanical contractor's license is required when the cost of the work exceeds what amount?

• a.$5,000
• b.$25,000
• c.$10,000✓
• d.$50,000

H.4115 (2023) raised the commercial licensing threshold from $5,000 to more than $10,000. Work costing over $10,000 requires a Contractor's Licensing Board license in the proper classification and financial group before the contractor bids or contracts.S.C. Code §40-11-30 (H.4115, 2023 - license threshold raised from $5,000)

A South Carolina contractor holds a commercial license issued by the Contractor's Licensing Board (CLB). What other work does that license also authorize?

• a.Only commercial work; residential building is entirely prohibited
• b.Residential work, because the CLB commercial license also authorizes residential building✓
• c.Electrical utility transmission work statewide
• d.Only federally funded projects

In South Carolina a CLB commercial license also authorizes the holder to perform residential building work, so a commercially licensed general contractor does not need a separate residential builder's license to build homes. The reverse is not true - a residential-only credential does not authorize commercial work.S.C. Code Title 40, Ch. 11 (CLB scope of commercial license)

Under South Carolina's contractor Financial Groups (Group I through Group V), a Group III contractor qualifies for a bid limit of up to what amount?

• a.$1,000,000✓
• b.$400,000
• c.$3,000,000
• d.$100,000

The Financial Groups tie bid limit to financial strength: Group I is $100,000, Group II is $400,000, Group III is $1,000,000, Group IV is $3,000,000, and Group V is unlimited. A Group III contractor may bid projects up to $1,000,000.S.C. Code Title 40, Ch. 11 Financial Groups I-V (H.4115, 2023)

To qualify for Group V (unlimited bid limit) in South Carolina, what minimum net worth must a contractor show, and what surety bond must it post (the bond equals the group's net-worth figure)?

• a.$250,000 net worth and a $250,000 bond
• b.$350,000 net worth and a $350,000 bond✓
• c.$1,000,000 net worth and a $1,000,000 bond
• d.$150,000 net worth and a $150,000 bond

Group V (unlimited bid limit) requires a minimum net worth of $350,000 (or working capital of $250,000) and a surety bond equal to the group net worth, which is $350,000. The bond amount for each group equals that group's net-worth requirement.S.C. Code Title 40, Ch. 11 Financial Groups (Group V thresholds)

How may a South Carolina contractor meet the financial requirement for a given Financial Group, and how is the required surety bond amount determined?

• a.By gross annual revenue, with no bond required
• b.Only by cash held in a business bank account, with no bond ever required
• c.By showing EITHER the group's minimum net worth OR its minimum working capital; the required surety bond equals the group's net-worth figure✓
• d.By net worth only, with a flat $10,000 bond in every group

A contractor may qualify for a Financial Group by showing either that group's minimum net worth or its minimum working capital. The surety bond required for the group equals that group's net-worth figure, giving owners a source of recovery scaled to the contractor's bid limit.S.C. Code Title 40, Ch. 11 (qualifying by net worth or working capital; bond = net worth)

Additional work beyond the original South Carolina contract scope should be documented by:

• a.The certificate of occupancy at closeout
• b.A verbal understanding reached on the jobsite
• c.A signed written change order describing the added scope, price, and time✓
• d.A recorded lien affidavit

Changes to the scope should be authorized by a written change order, signed by both parties, that states the added work, its price, and any schedule effect. Relying on verbal approvals is a leading cause of unpaid extras and disputes.Construction contract administration (change orders)

In a standard AIA contract set, which document contains the general conditions - the rules for notices, claims, changes, and payment?

• a.A201 - General Conditions of the Contract for Construction✓
• b.A701 - Instructions to Bidders
• c.G702 - Application and Certificate for Payment
• d.B101 - Owner-Architect Agreement

A201 (current edition A201-2017) is the general conditions - the rulebook governing notices, claims, changes, payments, and disputes, and it is referenced by the owner-contractor agreement. G702 is a pay application, A701 governs bidding, and B101 is the owner-architect contract.AIA A201-2017 General Conditions

A contract clause setting a fixed dollar amount per day of delay, agreed in advance as a reasonable estimate of the owner's loss, is called:

• a.Retainage
• b.A change order
• c.A mechanic's lien
• d.Liquidated damages✓

Liquidated damages are a pre-agreed, fixed sum (often per day of delay) that represents a reasonable estimate of hard-to-measure losses. To be enforceable the amount must be a genuine estimate, not a penalty; retainage and change orders address different issues.Contract law (liquidated damages)

Which of the following is required for a construction contract to be legally enforceable?

• a.Offer, acceptance, and consideration between competent parties for a lawful purpose✓
• b.A minimum contract price of $10,000
• c.Notarization by a sitting judge
• d.Prior approval by the Contractor's Licensing Board

An enforceable contract needs an offer, acceptance, and consideration (something of value exchanged), between parties competent to contract, for a lawful purpose. Notarization and board pre-approval are not general requirements for a valid construction contract.Contract law (essential elements of a contract)

A South Carolina job costs $90,000, and the contractor targets a 25% margin on the selling price. What is the correct bid?

• a.$108,000
• b.$112,500
• c.$120,000✓
• d.$72,000

For a target margin, divide cost by (1 - margin): $90,000 / (1 - 0.25) = $90,000 / 0.75 = $120,000. Multiplying cost by 1.25 gives $112,500, which is only a 20% margin - the classic markup-vs-margin trap.Margin: price = cost / (1 - margin)

A contractor's overhead runs 15% of direct job cost. On a job with $40,000 of direct cost, what is the total cost (direct cost plus allocated overhead) before profit?

• a.$6,000
• b.$54,000
• c.$40,000
• d.$46,000✓

Overhead to allocate = 15% x $40,000 = $6,000. Total cost = direct cost + overhead = $40,000 + $6,000 = $46,000, before any profit is added. Profit is then figured on top of this total cost.Estimating (overhead allocation as a percentage of direct cost)

An estimator prices framing at $6.50 per square foot for a 2,400-square-foot house. What is the framing estimate?

• a.$9,600
• b.$16,500
• c.$15,600✓
• d.$14,400

Unit-cost estimate = unit price x quantity = $6.50 x 2,400 sq ft = $15,600. The unit-cost method multiplies a known cost per unit by the measured quantity from the takeoff.Estimating (unit-cost method)

The critical path in a project schedule is best described as the path that:

• a.Is the shortest route through the network
• b.Is the longest chain of dependent activities, has zero float, and sets the shortest possible completion time✓
• c.Carries the most float, giving the schedule flexibility
• d.Contains the fewest individual tasks

The critical path is the longest chain of dependent activities. Because no other path is longer, it fixes the earliest the project can finish, and every activity on it has zero float, so any slip pushes out completion day for day.CPM scheduling (critical path)

A South Carolina general contractor (GC-Building) wants to self-perform specialty trade work on its own project. Under CLB rules, this is generally allowed only when the specialty work is ancillary and does not exceed what share of the total project cost?

• a.75%
• b.50%
• c.100%
• d.20%✓

A South Carolina GC-Building contractor may self-perform specialty work only when it is ancillary to the building project and does not exceed about 20% of the total project cost; larger specialty scopes must be performed by an appropriately licensed contractor.S.C. CLB rule (GC-Building self-performed ancillary work)

South Carolina's Illegal Immigration Reform Act requires private employers to verify new hires' work authorization how?

• a.By filing a Form W-2 at the time of hire
• b.There is no work-authorization verification requirement in South Carolina
• c.By checking a driver's license only
• d.By enrolling in and using the federal E-Verify program for each new hire✓

South Carolina requires all private employers to enroll in and use the federal E-Verify program to confirm the work authorization of new hires. This is stricter than federal law, which does not mandate E-Verify for most private employers.S.C. Code Title 41, Ch. 8 (SC Illegal Immigration Reform Act - E-Verify)

A South Carolina general contractor pays a laborer hourly, controls his daily schedule, and supplies his tools, but issues him a 1099. On audit, the laborer is most likely:

• a.Reclassified as an employee, exposing the contractor to back payroll taxes and penalties✓
• b.Not reviewable once a contractor agreement is signed
• c.Classified as a volunteer, because no tax was withheld
• d.A valid independent contractor, because a 1099 was issued

The right to control the manner and means of the work - schedule, tools, and methods - makes someone an employee, regardless of the 1099. Misclassifying an employee as an independent contractor exposes the contractor to back FICA, FUTA, and unemployment taxes plus penalties.IRS Publication 15-A (common-law control test)

When a South Carolina contractor buys materials to be permanently installed under a lump-sum contract, who generally owes the sales or use tax on those materials?

• a.No one; construction materials are always exempt
• b.The owner, on the full contract price
• c.The contractor, as the consumer of the materials✓
• d.The project architect

A lump-sum real-property contractor is treated as the consumer of the materials and owes sales or use tax on the cost of those materials, rather than collecting tax from the owner like a retailer. The tax becomes a cost built into the bid.S.C. sales and use tax (contractor as consumer of materials)

The gross FUTA (federal unemployment) rate is 6.0% on the first $7,000 of each employee's wages. With the full credit for state unemployment tax paid on time, what is the effective FUTA rate?

• a.6.0%
• b.1.45%
• c.0.6%✓
• d.5.4%

The full 5.4% state credit reduces the 6.0% gross rate to an effective 0.6% (a maximum of about $42 per employee per year). FUTA is paid entirely by the employer and is never withheld from the employee.IRS Form 940 (FUTA rate and state credit)

Under South Carolina's mechanic's lien law, a contractor or supplier must serve and file the statement of the lien within how many days after last furnishing labor or materials?

• a.90 days✓
• b.45 days
• c.30 days
• d.One year

A South Carolina mechanic's lien statement must be served and filed within 90 days after the claimant last furnishes labor or materials to the project. Missing the 90-day window generally forfeits the lien.S.C. Code §29-5-90 (time to file the lien)

After a South Carolina mechanic's lien is filed, a suit to enforce (foreclose) it must generally be commenced within what period?

• a.Six months from the last furnishing of labor or materials✓
• b.There is no deadline once the lien is filed
• c.30 days
• d.Ten years

In South Carolina, a suit to enforce a mechanic's lien must be commenced within six months of the last furnishing of labor or materials. If suit is not filed in time, the lien dissolves and the claimant is left with ordinary contract remedies.S.C. Code §29-5-120 (time to commence enforcement suit)

On a project with the three standard construction bonds, which bond protects subcontractors and suppliers if the prime contractor fails to pay them?

• a.The license bond
• b.The bid bond
• c.The performance bond
• d.The payment bond✓

The payment bond guarantees that the prime contractor pays its subcontractors and suppliers, so it protects them. A bid bond protects the owner if a low bidder backs out; a performance bond protects the owner by assuring the work is completed.Surety bonds (payment bond protects subs and suppliers)

A South Carolina construction project that disturbs one acre or more of land generally requires what before land-disturbing activity begins?

• a.An NPDES construction stormwater permit, together with an erosion and sediment control plan✓
• b.No permit of any kind is required
• c.A federal wetlands hunting license
• d.An increase in the contractor's license bond

Land disturbance of one acre or more triggers the NPDES construction stormwater permit program (administered in South Carolina by the state environmental agency), which requires coverage and an erosion and sediment control plan to keep sediment out of waterways.Clean Water Act NPDES construction stormwater permit (1-acre threshold)

Which OSHA injury-and-illness form must be posted in a conspicuous workplace location from February 1 to April 30 each year?

• a.Form 300A, the Annual Summary✓
• b.Form W-2, the Wage and Tax Statement
• c.Form 300, the Log
• d.Form 301, the Injury and Illness Incident Report

Form 300A, the Annual Summary of the year's recordable cases, must be posted from February 1 to April 30 of the following year - and it must be posted even if there were zero recordable cases. Form 300 is the running log, and Form 301 is the single-incident report.29 CFR Part 1904 (Form 300A posting, Feb 1 - Apr 30)