Tag: Construction Industry Standards
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The Contractor Subcontractor Relationship – An Understanding
With construction, no other mutual bond has such a high dependency on each other as the contractor subcontractor relationship. If the relationship is developed properly and with a mutual understanding, it can be very successful.
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Profit Standards for Residential Contractors
Profit standards for residential contractors vary depending on the type of contractor. In general, the net profit standard for contractors in the upper tier of performance range from 5.8% to as high as 9.6% of sales.
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Using Cash in Construction
There is a notion in business that using cash to pay for materials or service is illegal. IT IS NOT ILLEGAL TO PAY FOR MATERIALS OR SERVICE WITH CASH. It is illegal to do this if you do not properly document the transaction.
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Branching Out in Construction
To reduce risk and provide greater security to all parties the small construction company should consider branching out. What I mean is adding an additional class or line of construction work to the company’s portfolio so that in hard times there are more opportunities for work.
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Contractor’s Profitability
It costs a lot more than you realize to build a home or perform residential repairs. This article looks at both the homeowner’s and contractor’s perspective of what one perceives and the other actually incurs.
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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.
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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.
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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…
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How to Use Class Accounting in Construction
Class accounting is a form of accounting whereby the revenues and direct costs are grouped into divisions within the company. It is a very effective form of accounting in construction. Learning how to use class accounting in construction is easy and works extremely well with phase accounting.
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What is a Reasonable Profit in Construction?
For any company, profit is based on the risk reward concept. With construction, what should be the profit (reward) given the risk? What is a reasonable expectation given the industry and the particular business? There is no single correct answer. The construction industry is divided into several significant branches. This article is focused on the residential contractor. From…