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COGS Construction

What is included in COGS for a construction company?

COGS for a construction company includes all the direct and indirect costs associated with completing a construction project. These costs are used to determine the actual expenses incurred to produce the completed project, including direct labor, materials, and other related costs. Calculating COGS for a construction company is more complex than for other industries. It […]

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Cost Overruns Causes

What are the most common causes of cost overruns in construction projects?

Construction projects are often complex and involve multiple stakeholders, tight deadlines, and numerous challenges. One of the most significant problems that construction managers face is cost overruns. Cost overruns occur when the actual expenses exceed the originally estimated costs, resulting in budgetary shortfalls, delays, and other negative consequences. In this article, we’ll explore the most

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Contractor Record Keeping

What Should an Independent Contractor Keep Track Of?

As an independent contractor, it’s important to keep accurate records of your financial transactions and project-related activities. Maintaining detailed records is crucial for successful project management and tax compliance. In this section, we will discuss the essential items that independent contractors should track for seamless record keeping and efficient project management. Key Takeaways: Understanding the

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Major Expense

What is the biggest expense in construction?

Construction projects are complex and require significant investment. From design and architectural expenses to labor and equipment costs, the financial aspects of construction are numerous. However, identifying the major expense in the construction industry is critical to understanding the financial complexities involved in construction projects. In the United States, construction expenses have been rising steadily

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Tax Savings

How much money should I set aside for taxes as an independent contractor?

As an independent contractor, tax savings should be at the forefront of your financial planning. Unlike employees, contractors are responsible for paying self-employment tax on top of income tax, which can add up quickly if not properly budgeted for. So, how much money should you set aside for taxes as an independent contractor? There is

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Capitalized Costs

What Construction Costs Can Be Capitalized?

Construction projects involve various costs, and project managers must understand which costs can be capitalized. Capitalizing costs involves treating expenses as assets rather than expenses, thereby impacting a project’s financial statements and affecting cash flow. It is essential to adhere to the accounting standards in the United States to accurately reflect a project’s financial position

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Capitalization Costs

Capitalization Costs: Understanding Construction Expenses and Excluded Costs

When embarking on a construction project, it’s important to understand the various expenses involved and how they are accounted for. Capitalization costs, in particular, are a crucial aspect of construction accounting that often requires careful attention. Generally speaking, capitalization costs refer to expenses that are related to the construction process itself and can be added

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Cash Reserves

How much cash should a construction company have on hand?

As a construction company, maintaining healthy cash reserves is critical to ensuring a stable and thriving business. Having enough cash on hand can be the difference between surviving a sudden economic downturn or weathering an unexpected delay in project completion. But how much cash should a construction company have on hand to maintain financial stability

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