Category: Construction Industry Standards
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Estimates, Bids and Proposals – Differences Among Offers in Construction
Estimates, bids and proposals are terms used to present a dollar value associated with construction work. The terms are NOT interchangeable.
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Residential Roofing Contractors – Financial Performance Standards
The national average sales for residential roofing contractors are slightly greater than $3 Million per year. A typical small roofing contractor will have a couple of crews working various projects and frequently sub out jobs. In addition, the owner acts as a project manager and there are one to two estimators depending on the volume…
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Take-Off with Construction: Part 1 (Concepts and Materials)
Take-off with construction is a term used to refer to the process of detailing units and costs with a job estimate. Take-off supports the final values.
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Key Performance Indicators With Construction – Backlog and Pipeline of Work (Part 2 of 3)
Backlog and the associated pipeline of work is the second group of key performance indicators for a contractor. With construction, understanding the volume of existing contracts, i.e. backlog, aids the management team in setting production goals in the near term. In conjunction with pipeline information, a contractor can quickly ascertain future financial performance. In order…
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Construction Accounting
Construction accounting exists to provide two key financial points of information to contractors and the management team of a construction company. The first and most important financial point is field production profit. This particular profit measurement is commonly referred to as job profits. It is essential contract revenue less direct (hard) costs of construction. The…
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Key Performance Indicators With Construction – Production Reports (Part 1 of 3)
Key performance indicators with construction include the annual financial income statement (profit and loss statement) and job productivity reports.
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Residential Construction: Average Net Profit After Taxes Equals 9.4%
The residential construction industry’s average net profit after taxes equals 9.4% during 2019. The top four companies in the United States built and sold 151,366 homes with an average sales price of $376,703. Each home netted after income taxes $35,464 of profit. This equates to an average net profit of 9.4% in the residential construction…
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Markup on Materials – Setting the Proper Rate
There is no preset national standard for markup on materials. The IRS Construction Industry Audit Technique Guide (May 2009) states that from the Means Contractor’s Pricing Guide include a standard 10% markup on material for profit.
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Labor Burden in Construction – Proper Rate Formula
Labor burden in construction is a value added on to the respective hourly labor base wage to to determine the total cost per hour for a particular employee.
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Estimating in Construction – Part V (Cost Drivers and Application Principles)
The core tenet of estimating in construction is that each estimate is unique. This uniqueness is driven by hard costs of construction.