Tip the Construction Scales in Your Favor: Maximize Bonding Capacity

Most contractors know that one goal of theirs is to maximize bonding capacity, but they sometimes don't know where to start. What is Surety Bonding? Many people (and even some contractors) get confused when they first become involved in surety bonding and incorrectly think that surety bonding is insurance. However, insurance has different underwriting guidelines [...]

2018-11-12T15:53:04-04:00August 6th, 2014|CONSTRUCTION|

Leave the Creativity out of Your Financial Statements: Estimate Job Costs and Avoid Profit Fade

Creativity can be a great thing, but most would agree that your financial statements are not the time or place to "get creative” especially related to job costs and profit fade. Most contractors are aware that recognition of revenues is not driven by billings, but instead revenues are recognized based on the following formula: (cost [...]

2018-11-12T15:53:11-04:00July 22nd, 2014|CONSTRUCTION|

Construction Joint Venture Basics: How & Why It Works

Business owners usually dream differently from those who don’t own a business. Likewise, owners of construction companies often dream differently from owners of other types of businesses. They envision investments in large, earth moving equipment, and safety performance that beats their established record. And sometimes they dream about how another company's resources could help them [...]

2018-11-12T15:53:12-04:00July 11th, 2014|CONSTRUCTION|

Where’s My Crew? Preparing for the Impending Labor Shortage

Recent figures generated by the Construction Labor Market Analyzer, a web-based tool for collecting and aggregating construction labor data, construction labor data, estimates that by 2016 U.S. construction projects will require about 50% more than the current 6.7 million total workers available today. For contractors, such a drastic shortfall of skilled laborers could boost wages [...]

2018-11-12T15:53:17-04:00June 24th, 2014|CONSTRUCTION|

Construction Estimate Review and Check-Up

One typical and often-overlooked way construction businesses lose money is an estimate. Although estimating is no doubt a “bread and butter” skill of any contractor, accuracy can slip over time without an occasional check-up on this critical process. Check out our advice before beginning your construction estimate review. Regular Construction Estimate Review Process The first [...]

2018-11-12T15:53:19-04:00June 24th, 2014|CONSTRUCTION|

Construction Repair Regs Tips for Providng Added Value to Customers

Construction companies that understand the repair regs and whether to expense or capitalize can help customers reduce their tax bills. For example, consider a building containing asbestos insulation that has begun to deteriorate, thus creating a health risk. The owner hires a contractor to replace the insulation. Assuming that the customer meets the requirements under [...]

2018-11-12T15:53:20-04:00June 24th, 2014|CONSTRUCTION|

Winning the Race: Finishing First with Fast Track Construction Project Success

The bid has been won, but the owner wants to hit completion in three months—half of the time anticipated for the project type in question. Welcome to the challenging world of fast track construction project jobs. Compressed timelines and tight margins are no strangers to many construction markets. So consider these ways to not just [...]

2018-11-12T15:53:23-04:00June 21st, 2014|CONSTRUCTION|

Weighing the Subguard Policy Decision

What is subguard, and is it relevant to my business? More subcontractors and owners should be asking this question. Subguard is the trade name for an insurance product developed 12-15 years ago by Zurich North America Insurance Company. The purpose was to replace traditional subcontractor bonds. Subguard is a product typically used for large projects [...]

2018-11-12T15:53:25-04:00June 21st, 2014|CONSTRUCTION|

Construction Self-Insurance Appetite for Risk

Construction self-insurance is a method of managing risks in which money is set aside to fund potential future losses. Any insurable risk could be self-insured; however, state laws regulate who qualifies and what types of coverage can be self-insured. Generally, more predictable and measurable risks are better suited for self-insurance than highly unpredictable catastrophic risks. Two [...]

2018-11-12T15:53:32-04:00June 10th, 2014|CONSTRUCTION|

Don’t Get Anchored Down by Construction Cash Flow Drag

As a contractor’s workload increases, the company will experience a  construction cash flow drag. Knowing this situation, a contractor should bill as much as its contract allows—and as quickly as possible to finance the projects with customer cash. Additionally, contractors should evaluate whether to buy or lease new equipment to do this work. This decision [...]

2018-11-12T15:53:34-04:00June 4th, 2014|CONSTRUCTION|

Evaluating the Labor Burden of Construction Indirect Cost Accounting

An area of great debate is the accounting for construction indirect cost accounting, such as labor burden costs and overhead costs. These costs are described as indirect because they do not relate directly to the construction activity, but “attach” to a related direct cost item. Labor burden is often recoverable on a construction contract as a [...]

2018-11-12T15:53:36-04:00June 4th, 2014|CONSTRUCTION|

Top 8 Construction Fraud Schemes

As many construction business owners scramble to secure new work and manage cash flow for survival, it becomes even more important to ensure sound business practices. One of the best places to begin is to evaluate opportunities for fraudulent activities and institute any necessary internal controls to avoid associated financial losses. We will examine some [...]

2018-11-12T15:53:36-04:00June 1st, 2014|CONSTRUCTION|

Importance of Construction Salvage Values and Asset Lives for Property and Equipment

Salvage values can be defined as the estimated value a piece of property or equipment will have at the end of its useful life. For book reporting purposes, it is important that you don’t underestimate the life of the asset or its expected salvage value.  To do so will result in a number of negative [...]

2018-11-12T15:53:42-04:00May 15th, 2014|CONSTRUCTION|

Four Key Contractor Revenue Recognition Considerations

The Financial Accounting Standards Board (FASB) proposed a dramatic change in the way companies—including those in construction—accounted for revenue under Generally Accepted Accounting Principles (GAAP). These changes are a direct result of plans to converge GAAP and the International Financial Accounting Standards (IFRS). The goal is to reconcile different accounting standards and practices in revenue recognition, [...]

2018-11-12T15:53:43-04:00May 11th, 2014|CONSTRUCTION, REVENUE RECOGNITION|

Company Huddle: Disclosing Construction Claims

Many construction business owners have previously dealt with litigation and claims; for those that have not yet, they may do so in the future. By getting in the huddle and understanding the contingencies, you can better prepare your team for any outcome. Generally Accepted Accounting Principles (GAAP) require a company to either recognize and/or disclose [...]

2018-11-12T15:53:44-04:00May 9th, 2014|CONSTRUCTION|

Are Millennials the Answer to Construction Labor Shortages?

It’s estimated that by 2016 about 50% more construction industry workers will be needed in the U.S. than are currently on the job or otherwise available today. There are a variety of ways contractors can prepare now to attract and retain tomorrow’s best construction workers by creating job opportunities that specifically meet the needs of the [...]

2018-11-12T15:53:45-04:00May 9th, 2014|CONSTRUCTION|

Why Is the “Blocking and Tackling” of Construction Contract Accounting So Important?

It’s important to know how to block and tackle when playing the game of football. After all, these are fundamentals on which the game is based.  Every play is designed to effectively accomplish a goal, but missed  blocks or tackles do not help the team to move ahead. Using percentage of completion accounting in internal [...]

2018-11-12T15:53:49-04:00April 11th, 2014|CONSTRUCTION|

Where Did That Nail Go? Construction Material Costs Accounting

Anyone that’s committed to a do-it-yourself project has probably experienced the dreaded missing parts scenario. Three nails are needed to complete the project, and somehow you only have two.  Luckily, construction material costs accounting doesn’t apply to DIY-ers. Accounting pronouncements and related guides prescribe the requirements of accounting for the costs of construction contracts. Contract costs [...]

2018-11-12T15:53:51-04:00April 5th, 2014|CONSTRUCTION|

Better Start, Better Finish: 5 Steps for Avoiding Construction Project Delays Before Work Begins

Most runners will tell you that crossing the finish line requires training and preparation before the big day. Much like a race, a successful construction project also requires planning before the work begins—which helps contractors avoid construction project delays and slowdowns that ultimately affect the bottom line. Project interruptions occur for various reasons ranging from [...]

2018-11-12T15:53:52-04:00April 1st, 2014|CONSTRUCTION|

Blueprint of a Construction Buy-Sell Agreement

Blueprints provide the details and specifications for most construction projects. Can you imagine simply constructing a building from scratch without any plans? Well, having a multi-owner company without a construction buy-sell agreement is similar to trying to build a project without any plans. Construction Buy-Sell Agreement Purpose The purpose of a buy-sell agreement is to [...]

2018-11-12T15:54:08-04:00March 9th, 2014|CONSTRUCTION|