Tag: Construction Contract
-
Retainage in Construction – Purpose, Accounting and Law
A tool used by a developer, contractor or homeowner to keep the primary party committed to getting the project completed is called ‘retainage’.
-
Construction Management Fee – What is a Good Rate to Charge?
Charging a construction management fee is one of several different construction production styles. The most common is the traditional build and sell style. Here the contractor puts up the capital to build the house and sells the house while under construction. A common term used with this style is ‘Spec’ house. Another style involves shifting…
-
Contractor’s Audit Guide – Introduction to IRS Audits
In 2009, the Internal Revenue Service issued the Construction Industry Audit Technique Guide (ATG) for use by IRS agents and for contractors.
-
Job Cost Reports – Balance Sheet Set
Construction accounting uses job cost reports to inform management of progress and existing issues with projects. There are several different sets of reports. The balance sheet set functions as an overall financial picture for the company.
-
Margins in Construction
I’ve been asked to identify the average margins in the construction industry. Honestly, there is no such thing. I tried and after several hours of research I couldn’t even get one of the types of contractors to have consistency in their numbers.
-
Allowances in New Home Construction Contracts – The Business Model
This article is designed to help the contractor address the proper procedures and documentation related to allowances in a new home contract.
-
Construction Draw Schedule – Ranch Model Home
This is a basic draw schedule explanation for an A-frame ranch model home. This article details the draw schedule format illustrated below. It details the approximate percentages for the respective phases of construction and explains how the draw schedule is laid out and works.
-
How to Calculate the Best Markup for a Construction Project
Every construction project has costs beyond the direct costs and the contractor wants to earn a profit. To cover these costs he must have an appropriate markup. The contractor must give consideration to many variables and circumstances to calculate the best markup for a construction project. To determine the best markup percentage on costs, the contractor…
-
Completed Contract Method of Accounting in the Construction Industry
The completed contract method of accounting recognizes revenue and the associated costs once the project is complete. This is one of the two popular accounting methods used in the construction industry. For residential contractors, the completed contract method may have a slight tax advantage by deferring revenue recognition but is generally not considered the best method of…
-
Methods to Reduce Costs in New Home Construction
There are two primary methods of reducing costs of construction. The first is cost negotiation and the second is cost shifting. These two methods have several tools in each to achieve overall price reduction. The following describes each method and the respective tools within each method that you can use to achieve overall cost reduction.