NASCLA Procurement and Contracting guide

What the bulletin says, and what it leaves out

PSI's Candidate Information Bulletin (updated 7 Jul 2026) gives the area name and its count of 31, with no topic list. The topics below are our reading of the area name and the reference list. They are not a list NASCLA publishes.

Topics to cover

• Bidding and estimating. Bid packages, addenda, responsive bids and responsible bidders, kinds of estimate, quantity takeoff, labor productivity and labor burden, unit-price bids.
• Markup and margin. The most common arithmetic trap in the area.
• Bonds and insurance. The three parties to a surety bond; bid, performance and payment bonds; general liability, workers' compensation, builder's risk; additional insured, waiver of subrogation and indemnity clauses.
• Contracts and delivery. Lump sum, unit price, cost plus a fee, and cost plus a fee with a maximum price cap (GMP); design-bid-build, design-build and construction management.
• Changes and payment. Change orders and directives, written notice, payment applications, retainage, liens and lien waivers.
• The business. Business forms, financial statements, break-even, ratios, depreciation, payroll, federal employment rules and tax forms.

Books to open first

Our suggestion from the titles. NASCLA publishes no mapping.

• NASCLA Contractors Guide to Business, Law and Project Management: the core book for this area.
• Construction Project Management: delivery methods and contract types.
• Construction Jobsite Management: changes and payment paperwork in the field.

Worked examples

All numbers are invented. Each is worked two ways.

Markup versus margin. Direct cost is $250,000.

• A 12% markup gives 250,000 x 1.12 = $280,000. The profit is $30,000, so the margin is 30,000 / 280,000 = 10.71%. Check: 0.12 / 1.12 = 0.1071.
• A 12% margin needs 250,000 / 0.88 = $284,090.91. Check: 284,090.91 x 0.88 = 250,000.00.

Bidding a 12% markup when you needed a 12% margin leaves 284,090.91 minus 280,000 = $4,090.91 on the table.

Retainage on a pay application. Work completed to date is $540,000, retainage is 5%, and previous payments total $400,000. Retainage held is 540,000 x 0.05 = $27,000. Earned less retainage is 540,000 minus 27,000 = $513,000. This payment is 513,000 minus 400,000 = $113,000. Check: 540,000 x 0.95 = 513,000, and 400,000 + 113,000 = 513,000.

Federal overtime. A nonexempt employee earns $32 an hour and works 44 hours in one workweek. Straight time is 40 x 32 = $1,280, and overtime is 4 x 48 = $192, so gross pay is $1,472. Check: 44 x 32 = 1,408, plus a half-time premium of 4 x 16 = 64, gives 1,472.

Break-even. Annual overhead is $270,000 and the gross profit rate is 18%. Break-even revenue is 270,000 / 0.18 = $1,500,000. Check: 18% of 1,500,000 is 270,000.

State rules versus federal rules

This is a multi-state exam, so watch which kind of rule a question is about.

• Set by each state: lien notice and filing deadlines, who may file, licensing rules, and bond thresholds on state and local public work. Never answer one of these from memory as if it applied everywhere.
• Federal and the same everywhere: overtime at 1.5 times the regular rate for hours past 40 in a workweek under the FLSA, Form I-9 for every new hire, Form W-4 for withholding, Form 941 each quarter, and the employer matching the employee's Social Security and Medicare share. The Miller Act covers bonds on federal work.

Avoid memorizing dollar thresholds and wage bases that change each year.

Common mix-ups

• A bond is not insurance for the contractor. It protects the owner or the unpaid parties, and the contractor repays the surety.
• Markup is on cost; margin is on price. Write the formula before the numbers.
• Retainage base. Read whether the question retains on stored materials as well as completed work.
• Salvage value. Subtract it in straight-line depreciation, not before applying a declining-balance rate.

How to practice

Do arithmetic sets until each formula is automatic, then spend book time on bonds, insurance and contract terms. Tab the business and law topics in the Contractors Guide first, because this is the area with the most questions. The NASCLA study guide gives it two weeks, and the exam outline shows how it compares with the other areas. The second-largest area is General Requirements.

Practice it

Price a bid with the free markup and margin calculator and check a pay application with the retainage calculator. The break-even calculator finds the sales volume that covers overhead. Term guides for this area include bid shopping and bid peddling, bonding capacity, certificates of insurance, Davis-Bacon prevailing wage and the Miller Act.

Take the free 10-question check and see your score by subject area in minutes. It needs no signup and explains every answer.

The NASCLA Commercial course has a lesson for each of the 12 subject areas that shows which listed reference to open and how to apply it, original practice questions with every answer worked, and four timed practice exams of 115 questions on a 330-minute clock. Your scores come back by subject area, so you know where the next study hour goes. See the course.

Not affiliated with or endorsed by NASCLA or PSI. NASCLA and PSI are named only to identify the exam and its test vendor.

Sources

Show the list

• PSI Candidate Information Bulletin 1458, content outline and reference list, updated 7 Jul 2026. Retrieved 5 Nov 2026.
• Overtime Pay, U.S. Department of Labor, Wage and Hour Division.