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Important Considerations When Buying Another Construction Firm

Buying another construction firm can be an attractive way to grow your company's revenue base. A merger or an acquisition can allow you to: Add a new subcontracting specialty, Acquire an experienced labor force to reach new markets, and Deepen your penetration into the market your firm already serves. But there's more to mergers and acquisitions [...]

New AIA contracts emphasize insurance requirements

The construction contract documents published by the American Institute of Architects (AIA) are among the most commonly used forms on both commercial and residential projects in the United States. Although parties are free to modify these forms to suit their needs, it’s important to understand what the standard documents contain in order to negotiate appropriate [...]

Use Financial Statements to Make a Solid First Impression

Financial statements are a must-have for any organization. The balance sheet reveals how much its assets and liabilities are worth based on historic costs. The income statement tells investors and lenders how profitably and efficiently the company has performed during the accounting period. The statement of cash flows details sources and uses of cash from operating, [...]

Reviewing retainage, in concept and practice

Even the simplest construction project involves some degree of risk. Because of this, and the obviously higher risk applicable to more complex jobs, owners will always seek to protect themselves financially. One way they continue to do so is through retainage. As you're no doubt aware, under the concept of retainage, an owner withholds a [...]

Weigh the pros and cons of IPD and BIM

There’s been a lot of talk in the construction industry lately about integrated project delivery (IPD). IPD is a collaborative approach to construction projects that can help reduce costs, eliminate errors and delays, minimize waste, enhance efficiency and generally make projects more successful and profitable. IPD usually goes hand-in-hand with building information modeling (BIM), a [...]

Preparing Your Business For Sale

Unlike selling a car or even your home, it is not possible to make your business look better by sprucing it up or window dressing it.  Years of planning should go into selling your business. Before you even decide how to prepare your business for sale you have to go through the following basic and [...]

Federal Contractors Get a Minimum Wage Increase in 2018

The U.S. Department of Labor's Wage and Hour Division (WHD) has announced that the minimum wage rate for federal contractors will increase from $10.20 per hour to $10.35 per hour, effective January 1, 2018. Background Information The U.S. Department of Labor's Wage and Hour Division (WHD) has announced that the minimum wage rate for federal contractors [...]

Joint Ventures: How they Can Open New Doors

Joint ventures are common in the construction industry, especially with large long-term projects. These collaborative arrangements allow construction firms to work together, for a limited time period, on one or more construction projects. The upsides include pooling of expertise and resources, broader geographic reach, reduced risk, and enhanced financing and bonding capacity. But joint ventures also [...]

Help yourself and the environment with recycled materials

Using recycled and reclaimed materials for construction projects can help curb greenhouse gas emissions and other pollutants. Doing so can also reduce the amount of waste sent to landfills. But, while doing good is its own reward, construction companies that use or produce these materials can also enjoy a variety of financial benefits. These include [...]

5 tips for building an incentive compensation program

As the economy continues to struggle, many construction companies are tightening their belts. Often, one of the first items on the chopping block is the annual bonus. But rather than eliminating such financial incentives, consider developing an incentive compensation program that’s designed to help achieve your firm’s goals. Here are five tips for designing a [...]

Ten Ways to Save Money on Insurance

Best practices for containing insurance costs are critical because insurance is one of the biggest costs in the dangerous construction environment. Here are 10 ways contractors may be able to save money on insurance: 1. Know Your Policy, Know Your Needs Insurance agents are salespeople. They may not be as concerned with trimming your company's costs [...]

Effectively Use Credit to Finance Controlled Revenue Growth

If you find your company gaining a large influx of projects, the biggest problem will be the boost in the amount of capital you will need in comparison with your cash flow. A jump in new jobs can strain your firm's resources, challenging the firm's capacity to hire field crews, its technology infrastructure and its cash [...]

Waivers of subrogation: Are you really protected?

It’s common for a construction contract to contain a “waiver of subrogation” provision under “insurance requirements.” Unfortunately, these provisions are widely misunderstood. Although they’re designed to shield owners, contractors and subcontractors against lawsuits by insurers covering project-related claims, the protection offered may not be as extensive as you might think. Understanding the concept                                                                                                  Subrogation is [...]

Looking for a succession strategy? Consider an ESOP

For construction company owners, succession planning can be a challenge. Some owners give the business to their children, but that may not be an option for owners who don't have children working in the company or who need to "cash out" to fund their retirement. Others may sell the business, either to their children or [...]

How to Hold a Successful Project Close-Out Meeting

They say hindsight is 20/20. You can take advantage of that hindsight by holding regular project closeout meetings to find nuggets of truth about how the project went and learn from them. Not every project makes money for your firm. You can find ways to improve project and accounting management if you set a tone [...]

Cross-training can help mitigate the labor shortage

It’s an unfortunate fact of life that shows no signs of diminishing soon. The construction industry continues to struggle with a shortage of skilled labor. Many contractors find themselves sorely limited in the size and number of projects they can take on because they simply don’t have the workforce to deploy. One way to mitigate [...]

Consider a different route: 4 accounting alternatives that may reduce financial reporting costs

Many privately held construction companies prepare audited financial statements that comply with Generally Accepted Accounting Principles (GAAP) as established by the Financial Accounting Standards Board (FASB). They do so, at least in part, to satisfy the requirements of lenders, sureties and other business partners. Many of GAAP's requirements benefit private businesses and their financial statement [...]

Beware: CGL Policies Don’t Cover Faulty Work

Builders and contractors who buy commercial general liability (CGL) insurance policies with the impression that they will keep them safe from allegations of inadequate or faulty work must be aware of what their policies cover. It's important to know that a CGL policy does not provide coverage for work that is faulty. Some Questions to [...]

6 tips for more effective change orders

In the construction industry, change orders are a fact of life. The trick is making them a profitable one! Managing change orders wisely can make the difference between a successful job and a losing one. Here are six tips to better managing the process: Read the contract. This may sound obvious, but contractors often assume [...]

Is a joint venture the right choice for your company?

They say two heads are better than one. This can sometimes be the case for construction projects when, whether because of difficult logistics or challenging technical aspects of a job, two contractors team up under a joint venture to give themselves the best odds of success. It's an excellent solution when the circumstances are right. [...]