Construction or Engineering

We can help you make the right decisions for your construction company.

Construction professionals often face unique financial and accounting challenges that require specialized expertise. Some of the specific issues they encounter include:

1. Project-Based Accounting

• Challenge: Construction projects often involve multiple phases and stakeholders, requiring detailed tracking of costs, revenues, and profits by project.
• Need: Accountants must use specialized software or systems to manage job costing, work-in-progress (WIP) schedules, and project profitability.

2. Cash Flow Management

• Challenge: Payment cycles in construction can be long, with delays common due to retainage (withheld funds), milestone payments, and late customer payments.
• Need: Effective cash flow forecasting and strategies to maintain liquidity are critical.

3. Taxation

• Challenge: Construction businesses may deal with complex tax issues, such as:
  • Sales tax on materials.
  • Differentiating between repairs and capital improvements.
  • State and local tax variations for out-of-state projects.
• Need: Expert guidance on compliance and strategies to minimize tax liabilities.

4. Compliance with Regulations

• Challenge: Staying compliant with labor laws, safety regulations, and environmental standards.
• Need: Accountants familiar with these regulations can help track compliance costs and deductions.

5. Contract Revenue Recognition

• Challenge: Determining when to recognize revenue under percentage-of-completion or completed-contract methods.
• Need: Compliance with accounting standards like ASC 606 (Revenue from Contracts with Customers).

6. Change Orders and Cost Overruns

• Challenge: Managing financial impacts of change orders, unexpected delays, and cost overruns.
• Need: Detailed documentation and analysis to adjust budgets and forecasts.

7. Labor Costs and Subcontractor Management

• Challenge: Payroll complexities, union requirements, and managing subcontractor payments.
• Need: Systems for tracking hours, benefits, and contract terms accurately.

8. Equipment and Asset Depreciation

• Challenge: Managing the depreciation of heavy equipment and deciding when to repair or replace.
• Need: Tax strategies to optimize deductions and financial impact.

9. Bidding and Estimating

• Challenge: Overbidding can lose projects, while underbidding can lead to losses.
• Need: Accurate cost estimation to support competitive and profitable bids.

10. Insurance and Risk Management

• Challenge: Construction involves high risks, requiring specialized insurance like general liability, workers' compensation, and builder’s risk insurance.
• Need: Accountants who can factor in insurance costs and help manage risk effectively.

Hiring an accountant with experience in the construction industry ensures they are familiar with these challenges and can provide tailored advice and solutions.