325 TERMS, ONE SENTENCE EACH.
Every word on this list is one SPM uses with contractors every month. Each definition is a single sentence, and each one links to the page that works the same idea through with real figures. If you only want to know what something means, the sentence is enough and you can stop there.
THE SENTENCE IS THE ANSWER. THE LINK IS THE ARITHMETIC.
A definition tells you what a word points at. It cannot tell you what the number should be for a $6M electrical contractor, which is the question that costs money. So every entry carries both: the sentence, and the page where the same term gets a figure, a worked example and the reason it goes wrong.
30 of these terms are covered from more than one angle, and every page that covers one is linked from its entry. Nothing here asks for an email address.
The $5M to $10M transition
The $5M to $10M transition is the stretch where the financial control systems that carried a subcontractor through early growth hit their structural limits and have to be rebuilt rather than stretched.
13-week cash flow forecast
A 13-week cash flow forecast is a week by week map of every expected cash inflow from billing and AR collections against every known outflow such as payroll, payables, and debt service, ending in a projected bank balance for each of the 13 weeks.
Account separation
Account separation is the practice of holding a construction company's cash in several bank accounts with a defined purpose each, typically operating, payroll, a tax reserve and a retainage or holdback account, so that the balance a person looks at answers one question and stops hiding four.
Accounting basis
Accounting basis is the rule that decides when a transaction enters your books: cash basis records revenue when the deposit clears and cost when the payment leaves, while accrual basis records revenue when the work is earned and cost when it's incurred, whether or not any money has moved.
Accounts payable management
Accounts payable management for a subcontractor is the work of recording payables accurately by job and cost code, tracking what's due and when, and feeding those due dates straight into the cash flow forecast.
Accounts payable piling up
AP piling up is what happens when cash obligations come due faster than cash gets collected, so vendor invoices sit past terms while the work that covers them is still uncollected.
Accounts receivable
Accounts receivable is money your customers owe you that you haven't collected yet, which is why a big AR balance and an empty bank account can both be true on the same day.
Accounts receivable management
Accounts receivable management for a subcontractor is the work of recording AR accurately, tracking aging against a benchmark, and flagging follow up at defined thresholds before invoices drift.
Adjusted EBITDA
Adjusted EBITDA is the starting point for every construction company valuation: net income with the non-cash charges and the owner specific items that won't continue under new ownership added back.
Aggressive revenue recognition
Aggressive revenue recognition is billing that runs ahead of physical completion, ahead of approved scope, or ahead of the percent complete a job has truly reached.
Annual construction budget
An annual construction budget is the financial expression of your business plan for the year: projected revenue by month, overhead by category, a job margin target, and a cash flow projection.
AR aging report
An AR aging report is a list of every unpaid invoice sorted into buckets by how long it has been outstanding, typically current, 30, 60, and 90 plus days.
AR collection system
An AR collection system is a fixed weekly routine of aging review, calls at set day counts, and written escalation triggers that turns billed invoices into cash on a schedule.
Arkansas construction CFO
An Arkansas construction CFO is a fractional CFO who runs a commercial subcontractor's job costing, cash forecasting, and billing against the specific conditions Arkansas subs work under, meaning ARDOT and municipal pay cycles of 60 to 90 days and mechanic's lien and bond claim deadlines that run on a strict calendar.
The assembly line test
The assembly line test is a diagnostic that asks whether a trade's output can be measured in consistent, countable units that correlate to labor and cost.
Backlog
Backlog is the signed work you haven't built yet, and every dollar of it carries a cash requirement that comes due before the first pay app collects.
Backlog cash requirement
A backlog cash requirement is the amount of working capital a signed contract consumes before its first payment reaches the bank, calculated as weekly cash burn multiplied by the mobilization period.
Backlog coverage ratio
Backlog coverage ratio is total signed contract remaining value divided by average monthly revenue, which is how many months of work a subcontractor has under contract right now.
Backlog quality analysis
Backlog quality analysis is the review that breaks a single backlog dollar figure into its margin distribution, customer concentration, schedule timing, cash conversion, and execution risk.
Backlog revenue forecast
A backlog revenue forecast is a month by month projection of the billing expected from every signed contract, built from each project's burn rate and adjusted for schedule risk.
Backlog risk
Backlog risk is the chance that signed work you haven't built yet costs you money or cash instead of making it, measured across working capital, customer concentration, margin quality, and schedule dependency.
Balance sheet
A balance sheet is a statement of a company's assets, liabilities, and equity at a single point in time.
Banking relationship
A banking relationship is the ongoing working understanding between a contractor and a banker who knows the business, trusts its financial management, and can read a construction balance sheet without needing it explained.
Bid closing process
The bid closing process is everything that happens between submitting a number and receiving an award: the scope reconciliation, the qualifications attached to the price, the follow up conversation, and the record of what was bid and what became of it.
Bid contingency
Bid contingency is the financial cushion that protects your margin when actual conditions differ from estimated conditions.
Bid hit ratio
Bid hit ratio is total dollar volume of bids awarded divided by total dollar volume of bids submitted over 12 months.
Bid price
Bid price is direct cost divided by one minus your overhead rate minus your target net margin.
Bid risk pricing
Bid risk pricing is the practice of rating each specific risk on a project and putting a dollar figure on it inside the bid, instead of covering everything with one blanket contingency percentage.
Bid to actual margin variance
A bid to reality disconnect is a specific, findable reason the actual cost of a job came in above what the estimate said it would.
Bid win rate
A bid win rate is the share of the competitive bids you submit that you're awarded, and above 35% it's telling you your price sits below the market.
Bid-hit ratio
Bid-hit ratio is the percentage of bids submitted that result in a contract award, calculated as jobs won divided by jobs bid times 100 percent.
Bid-no-bid decision
A bid-no-bid decision is a financial decision about whether your company can fund, bond, and staff a job, not just an estimating decision about whether your crews can build it.
Billing cycle time
Billing cycle time is the number of days between when work is performed and when the invoice is submitted to the GC.
Billing discipline
Billing discipline is a system rather than a habit: one fixed cut off date, a schedule of values that supports consistent monthly billing, a pay app review before submission, and a 30 day AR collections trigger that runs on its own.
Billing lag
Billing lag is the number of days between a GC's monthly billing cut-off and the day you submit your pay application.
Billing velocity
Billing velocity is the elapsed time from when billable work is performed to when cash is received against that work.
Bonding capacity
Bonding capacity is the maximum aggregate and per-project bond amount a surety will extend, and it's driven primarily by working capital, net worth, and a working capital ratio in the healthy range, generally 1.5 or higher.
Bonding readiness
Bonding readiness is the cumulative result of operating disciplines that produce surety-friendly financials month after month, rather than a single document or filing.
Bonding support
Bonding support is the ongoing financial work that keeps your statements, your WIP schedule, and your working capital position in the condition a surety underwrites from.
Bookkeeper, controller, and CFO roles
The three seat financial structure is a bookkeeper who records the past, a controller who closes the books and makes that record accurate, and a CFO who uses the closed books to manage what happens next.
Bookkeeping frequency
Bookkeeping frequency is how often transactions are entered and reconciled, and it sets a ceiling on how current every report built from them can possibly be.
Break-even revenue
Break-even revenue is total fixed overhead divided by gross profit margin percentage, which is the minimum annual revenue the business has to do before it makes its first dollar of net profit.
Building a construction company to sell
A sale ready construction company is one where three years of clean job costed financials, a normalized owner salary, gross margin held above the band for their own trade and revenue, and a team that runs the work without the owner all exist before a buyer ever asks for them.
Business valuation
Business valuation for a construction company is the price a buyer will pay, calculated as adjusted EBITDA multiplied by a market multiple that reflects risk.
Busy but not profitable
Being busy without making money is what happens when a company sells enough work and keeps too little of each job, and it's a different condition from having no cash: a busy unprofitable contractor is losing margin inside the work, while a profitable one with an empty bank account is losing time between finishing work and collecting for it.
Busy year cash position
A busy year is one that moves more money through the business, and moving more money through is a different thing from producing more cash.
Cash conversion cycle
The cash conversion cycle is the time between cash going out for project costs and cash coming back from project receivables.
The cash gap
Structural float is the money you've already spent on labor and overhead that hasn't been collected yet, because payroll runs every week while pay apps collect every 45 days.
CCIFP
The CCIFP, or Certified Construction Industry Financial Professional, is the construction industry's own financial credential, covering WIP accounting, percentage of completion revenue recognition, job costing, bonding, and contract management.
CEO report
A subcontractor's financial dashboard is a rolling 13 month view of eight numbers: revenue, gross margin, overhead rate, net margin, working capital, current ratio, days sales outstanding, and backlog.
CFO-level financial leadership
CFO-level financial leadership is the function that forecasts what's coming rather than reconciling what already happened, which is the line between a CFO and a bookkeeper.
CFOS
CFOS is a financial operating system for construction subcontractors that replaces the bookkeeper, CPA, and spreadsheet setup with one structure covering bookkeeping, controllership, and CFO advisory.
Change order accounting
Change order accounting is the discipline of moving a change through four systems: pricing at full burden, the contract record, the WIP schedule, and the next pay app.
Change order cash flow
Change order cash flow impact is the timing difference between when change order cost gets spent and when the change order gets billed and collected, and it works differently depending on whether the change order is unapproved, approved, or disputed.
Change order financial system
A change order financial system is a process that treats every change order as a cash flow line item with a written approval requirement, full overhead applied, its own SOV line, a billing date, and a collections follow-up scheduled before the work starts.
Change order log
A change order log is a record of every scope change by job: description, date directed, date submitted, date approved or disputed, dollar value, and billing status.
Change order markup
Change order markup is the overhead and profit percentage a subcontract permits you to add to the cost of added scope, which is a different and usually smaller number than the burdened cost of performing that scope out of sequence.
Civil CFO services
Civil CFO services are fractional CFO work built around how civil contracting moves money: a cost basis for every machine, unit price quantity tracking against the estimate, mobilization funded before any billing event, and public pay cycles that run 60 to 90 days.
Civil contractor CFO
A civil CFO is a construction CFO who understands the trade first and the accounting second: equipment cost basis, bonding capacity, public project payment cycles, and retainage timing.
Civil contractor financial problems
Civil contractor financial problems are cash timing problems before they're pricing problems: the money leaves for mobilization, retainage, and equipment ownership long before the pay application that covers it clears.
Committed cost
A committed cost is a cost your company is already obligated to pay under a signed subcontract, an approved purchase order, an executed rental agreement, or an approved change order, even though no invoice has come in yet.
Completed contract method
The completed contract method is a revenue recognition approach that records all revenue and expense on a project when it reaches substantial completion rather than as the work progresses.
Concrete contractor cash flow
Cash flow in concrete work is the distance between when you spend and when you collect, and in this trade that distance is structural rather than a management failure.
Construction bookkeeper
An office manager is the person who covers AP entry, vendor communication, payroll data collection, permits, and administration in a construction company, which is a different role from a bookkeeper, who maintains the books themselves through transaction coding, bank reconciliations, and financial statement work.
Construction cash emergency
A construction cash emergency is the point where payroll, suppliers, or debt service come due before the money you already earned has been collected.
Construction cash flow problem
A construction cash flow problem is a timing mismatch between when a subcontractor spends money on a job and when the money for that work reaches the bank.
Construction cash flow problems
Construction cash flow problems are timing problems: the distance between when a job spends cash and when that cash gets collected, left unmanaged across every job running at once.
Construction cash timing
Construction cash timing is the structural distance between when a subcontractor performs work and when the cash for that work reaches the bank, and it's driven by billing lag, GC pay cycles, retainage holdbacks, and material procurement timing.
Construction CFO
A construction CFO is the financial role that owns cash forecasting, job cost alignment, the real overhead rate, and billing cadence for a construction company.
Construction CFO cost
A fractional construction CFO is financial leadership bought on a monthly retainer scaled to your revenue, rather than as a full-time salaried seat on your payroll.
Construction chart of accounts
A construction chart of accounts is the account structure that separates true cost of goods sold from overhead and carries the WIP accounts percentage of completion accounting requires.
Construction chart of accounts setup
Construction chart of accounts setup is the work of building the cost code structure, the direct job expense category, the equipment cost basis and the overhead categories in an order where each one is finished before the next depends on it.
Construction company valuation
Increasing a construction company's value without adding revenue means raising the profit a buyer will underwrite and the confidence they have that it continues, since both are documentation problems as much as performance problems.
Construction entity structure
Entity structure is the legal form your construction company operates under, LLC, S-Corporation, or C-Corporation, and it drives taxes, liability protection, bonding capacity, banking relationships, and your ability to bring in partners or sell the business.
Construction ERP
A construction ERP is one system carrying job costing, financial management, and project tracking together, rather than leaving those three jobs in separate tools that don't talk to each other.
Construction finance
Construction finance is the forward looking decision layer of the business, what to bid, what to invest in, how to fund growth, and when to add capacity, as opposed to accounting, which is the historical record of what already happened.
Construction financial benchmark
A construction financial benchmark is the gross margin, overhead, or net profit percentage a subcontractor of a given trade and revenue size should be hitting.
Construction financial decision-making
Construction financial decision-making is the practice of running the equipment, hiring, and bidding calls off current financial data instead of memory, gut feel, and the monthly payment amount.
Construction financial leadership
Construction financial leadership is owning the financial control system that governs how a subcontractor bids, bills, and collects, rather than recording transactions after the fact.
Construction financial recovery
Construction financial recovery is the work of diagnosing what caused a bad year, stabilizing the cash position, and rebuilding margin and working capital on a schedule instead of hoping the next season fixes it.
Construction financial reporting
Construction financial reporting is the stack of reports built on top of the chart of accounts and the cost-to-complete estimate: the job cost report, the overhead rate, and the WIP schedule.
Construction financial statements
A subcontractor's financial statements are four reports, the profit and loss statement, the balance sheet, the cash flow forecast, and the WIP schedule, each answering a different question about the business.
The construction growth paradox
The construction growth paradox is what happens when revenue growth front loads cost before the collections catch up, so the bank account tightens in the same quarter the backlog looks best.
Construction hiring plan
A hiring plan financial model is the arithmetic that puts every planned hire in order, prices each one fully burdened, states the revenue each has to produce to pay for itself, and checks whether the cash exists to carry all of them until that revenue comes in.
Construction job costing
Construction job costing is the practice of tracking costs by individual job and by cost code within each job.
Construction job costing software
Construction job costing software is accounting software set up so every dollar of labor, burden, material, equipment, and subcontract cost posts to a cost code on a specific job rather than to a company-wide expense account.
Construction overhead rate
A construction overhead rate is everything it costs to keep the business open when you're not building, divided by revenue for the same period, and a rate that looks alarming is usually one of two different problems: a genuinely heavy office, or direct job cost filed above the line, which inflates the rate and flatters every gross margin at the same time.
construction PM training
Construction PM training on the financial side is teaching a project manager to run the money on his jobs rather than only the schedule, in a sequence that starts with the cost code structure he helped build, moves to the report, then to cost to complete, then to the written standards that let him act without asking, and finishes with the authority those standards require.
Construction rework
Rework is work performed a second time to correct or replace something already installed, and it carries real labor, material, and equipment cost that job costing almost never captures separately.
Construction tax strategy
Construction tax strategy is the set of decisions made during the year, equipment timing, entity structure, retirement funding, and revenue recognition method, that decide how much of your profit goes to tax.
Contract book
A contract book is the set of recurring service agreements a business holds: the customers who have committed to ordering work, rather than the work itself. It's the service equivalent of backlog, and it behaves nothing like it.
CONTROL chapters to CFOS systems crosswalk
The CONTROL to CFOS crosswalk is a chapter by chapter map from the eight chapters of CONTROL: The Construction Financial Operating System to the six CFOS systems SPM installs, which says who owns the work in each chapter, where one chapter carries four systems, and where a chapter sets a standard without building the routine that holds it.
ControlQore
ControlQore is a cloud-based construction financial management platform built exclusively for construction companies.
ControlQore for service businesses
ControlQore for a service business is the same job costing and WIP platform configured against a service catalogue instead of a bid, so cost codes follow revenue stream and work order type, every work order carries the agreement it belongs to, and margin is readable per agreement, per technician, and per truck.
ControlQore implementation partner
An official ControlQore implementation partner is a firm the software vendor has recognized as setting client systems up to its own internal standard, with direct access to the ControlQore team for anything an implementation requires.
ControlQore job costing setup
A ControlQore job costing setup is a five step configuration: the chart of accounts and cost codes get aligned to your estimate structure, historical financial data gets migrated, the WIP calculation logic gets configured, the system gets validated against one real job before go live, and the work then moves to a monthly management cadence.
ControlQore setup
ControlQore is job costing and WIP software built specifically for commercial subcontractors, which tracks cost by job and cost code, generates the WIP schedule automatically off that cost data, and surfaces job profitability while the job is still running rather than only at month end close.
Cost per SF by insulation type
Cost per SF by insulation type is fully burdened labor and material cost divided by the square feet installed, tracked separately for each insulation type and access condition instead of totaled across the whole job.
Cost per SF by membrane type
SF unit cost tracking is job costing that measures labor hours, material, and equipment per square foot by membrane type, so the unit you bid in is the unit you cost in.
Cost per truck per day
Cost per truck per day is the fully burdened daily cost of one unit of service capacity: one technician, one vehicle, and the share of overhead that unit carries, divided by the days it's available to work.
Cost per unit
Cost per unit is the labor cost of a job phase divided by the units the crew installed in that phase, which makes it the only number that tells you whether the money you spent bought the production you paid for.
Cost to complete
Cost to complete is the answer to one question asked line by line: how much more money will it take to finish this job?
Credit line increase
A credit line decline at a growing subcontractor is a statement about what the bank can read in your file rather than a judgment about your company.
Current ratio
Current ratio is current assets divided by current liabilities.
Dangerous backlog
A dangerous backlog is one that requires more working capital to execute than the business has available, including undrawn credit.
Davis-Bacon civil job costing
Davis-Bacon civil job costing is the cost structure a civil contractor runs on federally funded work, where cost codes track wage classification by equipment type and quantities track by DOT pay item instead of by one labor line.
Davis-Bacon concrete job costing
Davis-Bacon concrete job costing is the cost structure a concrete contractor runs on federally funded work, where cement mason hours, laborer hours, and form work hours each carry their own cost code and quantities get tracked in the units the engineer accepts.
Days in AR
Days in AR, also called days sales outstanding, is the average number of days it takes to collect payment after billing.
DBE certification
DBE, MBE, or WBE certification is a Disadvantaged, Minority, or Women Business Enterprise designation that opens specific bid opportunities and satisfies GC utilization goals on public projects, in exchange for financial reporting requirements, size standards, and ongoing compliance obligations.
Debt service coverage ratio
Debt service coverage ratio, DSCR, is net operating income divided by total annual debt service, meaning the principal and interest payments the business owes across a year.
Debt-to-equity ratio
The debt-to-equity ratio is total liabilities divided by total equity, which is the measure of how much of the business is financed with borrowed money versus owner money.
Delayed loss recognition
Delayed loss recognition is what happens when a contractor knows a project is heading for a loss but defers recognizing that loss in the financial statements by overstating percent complete, understating cost to complete, or both.
Disputed invoice
A disputed invoice in construction is a pay application the general contractor has refused or reduced while agreeing that some work was performed, which makes it a different problem from a late payment: nobody is arguing about the date, they're arguing about the amount, and until the amount is settled the clock on collection hasn't started.
Divisional profitability
Divisional profitability is the profit each side of a mixed business earns on its own, after its own revenue, its own direct cost, and its share of the overhead both sides consume.
Earned value
Earned value is the practice of measuring project progress in dollars of value earned rather than dollars of cost spent.
EBITDA
EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization, which is operating cash profit before the non-cash and financing items.
Electrical cash cycle before first payment
The 73 day cycle before first payment is the stretch where a commercial electrical subcontractor funds switchgear deposits, mobilization, and rough-in labor out of its own cash or line of credit before the first check clears.
Employee versus subcontractor decision
The employee versus subcontractor decision is the choice to self-perform a scope with your own crews or buy it from a subcontractor, and it drives labor cost, financial risk, cash flow, IRS compliance, and how far the business can scale.
Equipment cost allocation
Equipment cost allocation is the mechanism that moves the cost of owning and running a machine out of a company-wide pool and onto the specific jobs that used it, using a charge rate applied to a measured quantity of machine time.
Equipment cost basis
Equipment cost basis is the true daily, weekly, or monthly cost to own and run a specific machine, separate from the operator who runs it and the fuel it burns.
Equipment replacement reserve
An equipment replacement reserve is cash set aside from each machine's billed cost, accumulated over its working life, so the funds to replace it exist before it fails.
Equipment utilization
The sell-or-keep decision is a comparison of a machine's annual true ownership cost against the internal revenue it generates at its current utilization.
Escalation ladder
The escalation ladder is the ordered set of moves a subcontractor works when a GC pays slow: verify your own paper, run a collections cadence, use the formal notice and lien levers, then use the contractual and strategic ones.
Estimate error
An estimate error is a wrong cost assumption built into a bid, which locks in a loss on the job before the crew ever mobilizes.
Estimate inputs
Estimate inputs are the production rates, burden rates, and overhead percentage a bid gets priced from, and when any one of them is wrong the bid price is wrong before the job starts.
Estimating accuracy
Profit is a decision you make before the bid goes out rather than what's left over after the costs come in.
Estimating and finance alignment
Estimating and finance alignment is the mapping that makes every estimate line comparable to a job cost code, so actual cost can be measured against the bid while the job is still running.
Estimating error
An estimating error is a wrong assumption built into the bid that locks in a margin loss before the first crew day.
Exit planning
Exit planning is the multi year work of building the financial documentation and cutting the owner dependency that a buyer pays a premium multiple for.
Exit planning timeline
An exit planning timeline is the 36 month sequence a commercial subcontractor runs before a sale, with the financial system installed at month 36, operations transitioned at month 24, an advisor engaged at month 12, and a letter of intent negotiated at month 6.
Fake profitability
Fake profitability is net profit that appears on the P&L but never reaches the bank, produced by overbilling, unrecognized job losses, and overhead misallocation.
The feast or famine cycle
The feast or famine cycle is the swing between flush months and broke months that happens when lumpy job revenue has to cover overhead that never pauses.
Field reporting discipline
Field reporting discipline is the daily habit of logging labor, equipment hours, material usage, and change order work by project and cost code on the day the work happens.
Field to finance reporting
The field to finance disconnect is the delay between what the crew knows about a job today and when the office learns about it in dollars.
Field to financial alignment
Field to financial alignment is the practice of mapping every cost code in the estimate to its job cost code before mobilization, so the PM knows where every receipt, invoice, and labor charge belongs.
Financial accountability
Financial accountability in a construction company is about ownership rather than blame: one person owns each financial outcome, at a defined cadence.
Financial authority
Financial authority is the written assignment of which financial decisions belong to the field, which belong to the CFO function, and which belong to the owner.
Financial control
Financial control is the operating discipline that lets the owner of a subcontracting business make informed decisions about cash, margin, and capacity on the cadence the business needs them.
Financial decision framework
A financial decision framework is the structure that decides which person owns which financial decision, on what cadence, and with what information in front of them when they make it.
Financial forecasting system
A financial forecasting system is a forecast that gets updated weekly from actual transactions, stays tied to the current project schedule, and is kept at two horizons: 13 weeks for cash management and 24 months for strategic planning.
Financial governance
Financial governance is the system of rules, roles, and rhythms that financial control operates within.
Financial infrastructure
Financial infrastructure is the set of bookkeeping, job costing, reporting, and CFO functions a construction company runs on, sized to the revenue it's doing right now.
Financial legibility
Financial legibility is how easily a banker can read your business from the documents you send: accrual books with percentage of completion revenue, a WIP schedule that ties to the income statement, and a close that finishes every month.
Financial ownership
Financial ownership means one person is accountable for knowing the numbers, using them to make decisions, and flagging problems before they become crises.
Financial statements
A construction financial statement package is three reports read together, the profit and loss statement, the balance sheet, and the cash flow statement, each one answering a different question about the business.
Financial structure at $1M of revenue
The financial structure at $1M of revenue is the smallest set of controls that lets a subcontractor price work correctly and see a cash shortfall before it happens: a real overhead rate, job costing built against the estimate, a short cash forecast, and a monthly close on a date.
Financial systems at $10 million
A $10 million financial system is the set of things a subcontractor needs running at that revenue: a real job costing platform, a WIP report with history behind it, a cash forecast sized to the receivable and retainage load, and CFO level oversight that doesn't run through the owner.
Finding the work
Finding the work is the first of the five things a construction company has to do, before winning work, performing it, funding it and protecting it, and treating it as a sales activity is what makes it expensive: the decision about which customers to pursue is a financial decision, because it sets your collection cycle, your concentration risk and your estimating cost for the next two years.
First project manager hire
The first PM hire is an overhead decision before it's a staffing decision, because it adds 2 to 3 points to the overhead rate the day the offer letter gets signed and every bid after that has to carry them.
Fleet burden
Fleet burden is the true annual cost of a company truck or piece of equipment, not just the payment.
Floor-by-floor job costing
Floor-by-floor job costing is a separate cost code for each level of a multi-story building, so labor hours, fully burdened labor cost, and square footage framed are tracked per floor instead of blended across the whole structure.
Fractional CFO rates
A fractional CFO rate is the flat monthly retainer a construction company pays for CFO work, set by its last twelve months of revenue and by how much of the finance function it buys.
Fractional CFO red flags
A fractional CFO red flag is a specific, checkable sign that a firm can't run construction financial management, findable before the engagement starts rather than eight months into it.
Fractional CFO return
A fractional CFO is a part-time construction finance lead on a monthly retainer, and the engagement is worth it when the fee is smaller than the cash it recovers through better collections, a corrected overhead rate, and accurate job costing.
Fully burdened cost
The fully burdened cost of an employee is the wage plus payroll taxes, workers comp, and benefits, which together add 30% to 50% on top of the base.
GC bid list
A general contractor's bid list is the set of subcontractors that GC will send an invitation to bid, and access to it's decided by a risk review of four documents rather than by the relationship that got you the meeting.
GC concentration risk
GC concentration risk is the financial exposure that comes from having one general contractor represent a large percentage of a subcontractor's revenue.
GC non-payment
GC non-payment is a general contractor holding money you've already earned past the terms in your subcontract, either by disputing it or by going silent on it.
GC prequalification
GC prequalification is the financial review a general contractor's risk department runs before putting a subcontractor on the bid list, built on your statements, the ratios calculated from them, your WIP schedule, and your completion history.
GC qualification
GC qualification is the work a subcontractor does before submitting a bid to establish whether the general contractor pays, pays on time, and can be paid by the owner behind them, using credit records, lien filings, payment-speed history and direct references from other subs.
GC relationship profitability
GC relationship profitability is gross margin measured by general contractor, adjusted for payment timing, change order friction, and rework, so each relationship gets judged on what it leaves in the business.
General contractor bankruptcy
A general contractor bankruptcy is a court process that takes control of what the general contractor is able to pay, which turns a subcontractor's unpaid receivable from a collections problem into a claim against a business that no longer decides on its own who gets paid.
General contractor markup
A general contractor markup is the percentage a GC adds to subcontractor and material costs to cover its own overhead, risk, and profit.
Go/no-go bid decision
The go/no-go bid decision is the financial call about whether your company can fund, bond, and absorb a project, made before the estimate ever goes out the door.
Grading contractor cash flow
Grading cash flow strain is a timing problem created by equipment costs that hit before billing starts, a winter shutdown that stops revenue while overhead continues, and import fill and export haul costs that spike between billing cut-offs.
Growing past $5 million
The $5 million transition is the point where a subcontractor's financial system has to change, because overhead has grown past the rate in the bids, several job start cash holes now open at once, and WIP reporting becomes a requirement rather than an option.
Growth working capital requirement
Revenue growth in construction is a cash outflow before it's a cash inflow, because every new project start needs mobilization capital weeks or months before the first draw comes in.
Indemnification clause
An indemnification clause is the provision in a subcontract that decides who pays when a claim comes out of the project, and how far your obligation reaches beyond your own work.
Indirect labor
Indirect labor is any employee labor cost that can't be tied to a specific project, meaning shop time, travel between jobs, equipment maintenance, training, crew time between projects, and cleanup after completion.
Insurance allocation
Insurance allocation is the decision about which cost bucket each policy belongs in: workers' comp into the burdened labor rate, general liability into the bid base, equipment floaters into the per machine cost basis, and auto split between job and overhead by use.
Internal equipment rate
An internal equipment rate is the cost per hour or day assigned to owned equipment when it works a job.
Job closeout accounting
Job closeout accounting is the process of finishing a job in the books: final billing submitted, all costs in, estimate reconciled against actual by cost code, retainage requested, and the job closed so it stops distorting WIP.
Job cost management
Job cost management is the weekly comparison of actual cost to the estimate at the phase level, plus the action taken on what that comparison finds, which is a different job from entering the costs in the first place.
Job cost reporting lag
The job cost reporting lag is the stretch of weeks between when the field knows a job is running over and when the financial reports show it.
Job costing
Job costing means every expense, every labor hour, every material purchase, every equipment charge, and every subcontractor invoice, is coded to the specific project it belongs to before it hits the books.
Job costing setup
Job costing setup is translation work: taking the structure your estimators already use to bid work and building the accounting system to track cost in that identical structure, so actual cost and bid cost can be compared line by line rather than approximated at a category level.
Job costing software setup
Job costing software, ControlQore included, is a calculation engine that takes cost code structure, billing data, and cost to complete estimates as inputs and produces WIP and job profitability numbers as outputs.
Job financial review
A job financial review is a scheduled meeting that walks every active job's cost against budget, billing status, cost-to-complete, and revised profit projection, with the people responsible for the work in the room.
Job profitability
Job profitability is what a single job earned after every cost that belongs to it has been charged to it, and a contractor who can't state it for a finished job doesn't have an accounting problem so much as a coding one: the costs were all recorded, and they weren't recorded against the phases the job was bid in, so there's nothing to compare the estimate against.
A job that looks profitable but loses money
A job that looks profitable but loses money is one whose progress reports read on budget while untracked phase labor, overbilling, unallocated overhead, miscoded change orders, or held retainage turn the final number negative.
Joint check agreement
A joint check agreement is an arrangement under which the party paying you issues one check made payable to you and to one of your suppliers or lower tier subcontractors together, so both endorsements are required before the money can be deposited anywhere.
Labor burn rate
Labor burn rate is the dollar value of labor being deployed per week on a project, fully burdened, compared against the projected weekly requirement from the estimate.
Labor capacity
Labor capacity is the maximum productive labor hours your current crew can deliver in a period without overtime, which is crew size times productive hours per week times weeks in the period.
Labor forecast
The labor forecast is the estimate converted into a weekly deployment schedule: this many hours, this week, on this phase.
Labor overrun
A labor overrun is the difference between the labor hours and dollars an estimate assumed and what the timecards report once the phase is complete.
Labor productivity
Labor productivity is units of work completed per labor hour, measured against the units the estimate assumed for that same hour.
Labor variance
Labor variance is the difference between the labor an estimate assumed and the labor a job consumed, and it's always two variances added together: a rate variance from what you paid per hour, and an efficiency variance from how many hours the work took.
Labor-heavy backlog
Labor-heavy backlog is a book of signed work where labor makes up most of the estimated cost, which puts the margin outcome almost entirely on production rates.
Late payment from a general contractor
Late GC payment is a general contractor holding an approved pay application past the payment terms written into your subcontract, which finances their project with your money at zero interest.
Lien rights
Lien rights are your legal claim against the property you improved, and they're the strongest collection tool a subcontractor has when a GC stops paying.
Line of credit
A maxed line of credit is a revolving bank line that has been drawn to its limit, which means the cash buffer the business borrows against is fully spent.
Markup and margin
Markup is profit stated as a percentage of cost and margin is the same profit stated as a percentage of price, which is why a 20 percent markup produces a 16.7 percent margin rather than a 20 percent one.
Material buyout
Material buyout is the strategic purchasing window between contract award and production start, when material pricing gets locked and volume gets committed.
Material buyout timing
Material buyout timing is the stretch between the day an electrical contractor pays for switchgear and conduit and the day the contract finally lets him bill for it.
Material escalation
Material escalation is the increase in commodity material prices between the date a contractor bids a job and the date they buy the material for it.
Material escalation clause
A material escalation clause is a contract provision that allows the contract price to be adjusted when a specified material index rises above an agreed threshold during the job.
Material procurement deposit
A material procurement deposit is the down payment a supplier or fabricator requires before it will start building your long-lead material, commonly 30 to 50 percent of the order and due months before anything reaches the site.
Mechanic's lien
A mechanic's lien is a legal claim recorded against the property you improved, which clouds the owner's title until the unpaid amount gets resolved.
Mechanical job costing
Mechanical job costing is harder than most trades because a single mechanical, plumbing or HVAC contract routinely carries four different kinds of cost at once, prefabrication in a shop, field installation labor, controls and commissioning, and warranty or service work after substantial completion, and a cost code structure that treats them as one bucket of labor and material can't tell you which of the four lost the money.
Mechanics lien
A mechanics lien is a legal claim recorded against the property you improved rather than against the GC who owes you.
MEP coordination delay
An MEP coordination delay is a full or partial stop to installation caused by an unresolved coordination model, and it freezes your billing while crew, supervision, and equipment cost keeps accumulating.
Merchant cash advance
A merchant cash advance is a short term financing product where a lender advances cash in exchange for a percentage of future revenue, repaid through daily ACH debits out of your bank account.
Mid-job margin loss
An apparent mid-job loss is either a true cost overrun on one specific phase or a billing timing problem, and only a phase-level job cost report read against the WIP schedule tells you which one you have.
Mobilization charge
A mobilization charge is the contract line that pays a subcontractor for getting set up to perform work, covering equipment moves, staging, temporary facilities, bond premiums, permits, and startup labor that produces no billable production.
Month end close
The month end close is the process of entering, reconciling, and locking the prior month's books, and the deadline for it's the 10th of the following month.
Monthly financial meeting
A monthly financial meeting is a standing session that walks cash position, AR, job level performance, overhead, and working capital, and ends with specific action items carrying an owner and a deadline.
Negative bank balance
A negative bank balance in construction is usually a cash timing failure rather than a profit failure, because the work was earned and billed late while the money for it's still sitting with the GC.
Net profit
Net profit is what the company keeps after every job cost and every overhead dollar has been paid, which makes it the only revenue figure worth managing.
Net profit target
A subcontractor's financial goals are a set of ratios and reserves rather than a revenue number: a net profit target of at least 10 percent, gross profit per project that clears the overhead rate for their own trade and revenue band, overhead measured honestly and managed down, a cash floor in the bank, growing working capital, and zero debt.
No-damage-for-delay clause
A no-damage-for-delay clause is a subcontract provision stating that your only remedy for a GC-caused delay is a time extension, with no additional compensation for what the delay cost you.
Outgrowing your financial systems
Outgrowing your financial systems means the bookkeeper, spreadsheet, and year-end CPA that worked at $1M stop working as the business scales.
Overbilling
Overbilling is billing more than the percentage of work complete on a job, and underbilling is the reverse, where more work is complete than has been billed.
Overhead absorption
Overhead absorption is the method by which company overhead is applied to individual jobs, set by the basis it's divided across: revenue, direct labor hours, direct labor dollars, total direct cost, or equipment hours.
Overhead in a construction bid
Overhead is the cost of running your business that no single job carries: office staff, rent, insurance, equipment payments, vehicles, and software, all of which have to be recovered through your bids.
Overhead rate
An overhead rate is the percentage of revenue consumed by the cost of running the business rather than the cost of building the work.
Overhead rate repair
An overhead rate repair is the recoding and recalculation sequence that moves a company off an inherited bid rate and onto a rate computed every month from its own eight overhead categories.
Overhead recovery rate
Overhead recovery rate is the share of the overhead you incurred that you collected back through project billings, calculated as overhead recovered divided by overhead incurred.
Overtime cost in job costing
Overtime cost in job costing is the premium wage plus the burden charged on that premium, coded to the job that consumed the hours instead of buried inside one labor total.
Owner compensation
Owner compensation is a defined cost of running the business, made up of a fixed salary that sits inside the overhead rate and draws taken from net profit as a return on equity.
Owner compensation as overhead
Owner compensation as overhead is the practice of treating the owner's pay as a fixed cost the business must budget and earn, the same as any other salaried position, rather than as whatever cash happens to be left over after every other expense clears.
Owner salary
Owner salary is a market rate wage for the job the owner does, run through payroll and carried in overhead, which makes it a cost of running the business rather than a share of the profit.
The owner trap
The owner trap is the state where a construction company's whole financial system lives in the owner's head, so none of the money gets managed while he is doing anything else.
Owner-operator to CEO transition
The financial transition from owner-operator to CEO is the point where the owner stops being the system that holds job cost, cash, and margin in his head and starts managing off reports that run without him.
Ownership structure
Ownership structure in a construction company is the set of decisions about who owns what percentage, how that equity gets valued, and what happens when a partner wants out.
Partner buy-in
A partner buy-in is the transfer of an ownership stake in your construction company in exchange for cash, sweat equity, or both, priced off an agreed business valuation.
Partner buyout
A partner buyout is the purchase of one owner's equity by the company or by the remaining owners, which converts a share of ownership into a cash obligation and reduces equity by the amount paid.
Pay App 1 billing
The Pay App 1 minimum is the cost you deploy on a job before that first application clears the bank, plus the financing cost of carrying that money until it does.
Pay-when-paid clause
A pay-when-paid clause is subcontract language stating that the general contractor isn't required to pay you until they receive payment from the owner, which defers your payment rather than eliminating it.
Pay-when-paid financing cost
A pay-when-paid clause is subcontract language that makes the GC's obligation to pay you conditional on the GC first receiving payment from the owner, which moves the owner's payment delay risk onto you.
Payroll float
Payroll float is the number of payroll periods between the start of work and the first payment received from the first billing cycle, and the working capital it takes to cover them.
Payroll job costing integration
Payroll job costing integration is a direct data link that moves labor hours and burdened labor cost out of the payroll system and into the job costing system without manual entry.
Payroll near-miss
A payroll near-miss is what happens when a subcontractor has already earned the money but can't get it into the bank before Friday, so wages come due against a balance that won't cover them.
Payroll shortfall
A payroll shortfall is a cash timing problem rather than a profit problem: the money you earned is sitting in somebody else's account and your payroll date came first.
Per-agreement profitability
Per-agreement profitability is the revenue one recurring agreement produces over a year less every cost incurred delivering it: burdened technician labor, materials consumed on the customer's site, and the drive time between stops.
Percentage of completion
Percentage of completion accounting is a revenue recognition method that records earned revenue and profit on a construction contract as the work is performed, not when invoices are issued or cash is received.
Percentage of completion method
The percentage of completion method is an accounting method that recognizes revenue and gross profit in proportion to how much of a contract is complete, not when cash is collected and not when the job closes.
Pipe procurement float
Pipe procurement float is the money an underground utility contractor has tied up between paying for pipe and fittings and collecting the billing for them, and it routinely runs 120 to 150 days.
PM financial accountability
PM financial accountability is a boundary: the project manager answers for the job costs he can influence once the work is his, and not for the decisions made before he got it, which means the bid, the subcontract terms and the overhead rate sit with the office.
PM job cost scorecard
A PM job cost scorecard is a report that lists each project manager's active jobs with actual costs by cost code set against the original estimate.
PM labor cost accountability
PM labor cost accountability is giving a project manager four figures on every active phase, budget, actual to date, percent complete, and projected final cost, so the phase can be managed to budget instead of explained at closeout.
PM margin ownership
PM margin ownership is holding a project manager accountable for the profit on his jobs and not only the schedule, which means giving him the cost data and the authority to protect that profit week by week.
Point of no return
The point of no return is where debt service on existing obligations eats more gross profit than the business can produce at realistic revenue, and anything short of that's usually recoverable.
Potential change order
A potential change order, or PCO, is a written document created before extra work starts that describes the added scope, the estimated cost, the schedule impact, and the basis for the change.
Preliminary lien notice
A preliminary lien notice is the written notice a subcontractor sends to preserve the right to file a mechanics lien later, and in many states it has to go out before a lien can be filed at all.
Prevailing wage cash flow
Prevailing wage cash flow is the timing problem created when a civil contractor pays fringe benefits and certified payroll costs weekly on public work that only bills once a month.
Prevailing wage overhead rate
A prevailing wage overhead rate is an overhead rate calculated on the prevailing wage labor cost base with fringe benefits included, so public work carries its own share of SG&A instead of borrowing the private work rate.
Prevailing wage payroll integration
Prevailing wage payroll integration is a direct data link that moves certified payroll data, fringe contributions, and true labor cost out of the payroll system and into job costing without manual reconciliation.
Prevailing wage worker classification
Prevailing wage worker classification is the trade category a worker gets paid under on a public job, set by the type of work performed that day rather than by the worker's usual trade.
Procurement forecasting
Procurement forecasting is the practice of mapping every major material buy against the billing calendar before the PO goes out, so the cash cost of the purchase is a decision instead of a surprise.
Procurement timing
Procurement timing is the decision of when to place a material order, and it sets the date cash leaves your business relative to the date you can bill for that material.
Production rate
A production rate is the measure of how much work a crew can complete in a unit of time, such as linear feet of pipe per day, cubic yards of concrete placed per hour, or square feet of drywall hung per crew-day.
Production tracking
Production tracking is the measurement of daily field output against the production rate the estimate was built on, which makes it an early warning system rather than a record of what was spent.
Profit and loss statement
A profit and loss statement is the report that sets out revenue, direct job cost, gross profit, overhead, and net profit for a period, which is what the business earned rather than what it collected.
Profit fade
Profit fade is the gradual reduction of a project's gross profit between the original estimate and final completion.
Profit fade from change orders
Profit fade from change orders is margin your crew earned in the field and the company never invoiced, because the change order was never documented, never submitted, or never billed.
Profit versus cash flow
The distance between profit and cash is the time between the day a subcontractor earns a dollar on the P&L and the day that dollar is available to spend in the bank.
Profitable but no cash
Profitable but no cash is the normal condition of a growing subcontractor, because profit gets recognized when the work is billed while the money for it comes in 30 to 60 days later.
Progress billing
Progress billing is how subcontractors get paid for work as it's completed, using a schedule of values and monthly pay applications instead of waiting for full project completion.
Project suspension
A project suspension is a directed stop to the work before completion, and it leaves you carrying demobilization cost, standby commitments, and a lien clock that keeps running while no revenue comes in.
Property, plant and equipment
Property, plant and equipment is the long lived assets a contractor owns and uses to produce work, recorded on the balance sheet at what was paid for them and written down across the years they're used rather than expensed in the month they were bought.
Quarterly estimated tax
Quarterly estimated tax is the federal requirement to pay income tax as it is earned across four installments, due April 15, June 15, September 15 and January 15 of the following year, and for a subcontractor it behaves as four large outflows on dates that have nothing to do with when a general contractor pays.
Real job profit
Real job profit is what you earned on a job after overhead allocation, WIP accuracy, and billing timing are applied to what job costing says you spent.
Receivable financing
Receivable financing is any arrangement that turns an unpaid construction invoice into cash before the customer pays it, and the four forms a subcontractor gets offered are a bank line of credit, invoice financing, invoice factoring, and a merchant cash advance.
Retainage
Retainage is a percentage, typically 5 to 10 percent, of each pay application that's withheld by the GC until the project reaches substantial completion or final completion.
Retainage burndown clause
A retainage burndown clause is a subcontract provision that reduces the retainage percentage once the subcontract reaches a defined completion milestone, typically 50% complete.
Revenue breakeven on a hire
The revenue breakeven on a hire is the fully burdened cost of that person divided by your gross margin rate, which is the extra revenue the business has to produce to cover them.
Revenue recognition
Revenue recognition is the accounting choice that decides when a contract's revenue hits your P&L: proportionally as work is completed under percentage of completion, or all at once at substantial completion under completed contract.
Revenue up, profit down
Revenue up and profit down is what happens when a construction business grows past the financial system it was built on, so every job it adds multiplies a costing, billing, or overhead error it already had.
Revolving line of credit
A revolving line of credit is a bank facility a subcontractor draws on to bridge a specific cash timing shortfall and repays when the matching receivable comes in.
Route density
Route density is how many billable stops one technician or crew can complete in a day without leaving the service radius. Drive time is the paid, unbilled time between those stops, and in most service books it's the largest cost that never gets coded to anything.
Running out of cash
Running out of cash in construction is a symptom with six common causes that are indistinguishable from the bank balance, and the fix depends entirely on which one a company has.
SBA 7(a) loan
The SBA 7(a) program is the primary SBA loan program for contractors, allowing loans up to $5 million with terms up to 10 years for working capital and up to 25 years for real estate.
Scaling readiness
Scaling readiness is the condition where job costing, a monthly close on a fixed date, a cost to complete anybody can produce on request, and a working capital floor are all installed and running before the revenue that needs them is under contract.
Schedule of values
A schedule of values is a document that breaks a construction subcontract into individual line items, each with a dollar value, used to calculate payment on each pay application.
Schedule of values front-loading
Schedule of values front-loading is the structuring of the SOV so the early phases of a job bill closer to the cost those phases truly incur, instead of spreading contract value evenly across the project life.
Seasonal cash flow
Seasonal cash flow is the predictable swing between a construction subcontractor's summer cash peak and winter cash trough, driven by when the work can be built rather than by whether the work was profitable.
Second location
A second location is a second yard, shop, or office, and financially it's a block of fixed overhead that starts the day the lease is signed, against revenue that hasn't been won yet.
Section 179
Section 179 is an election that lets a business deduct the full purchase price of qualifying equipment placed in service during the tax year, up to an annual limit, instead of depreciating it over its useful life.
Shop and yard overhead
Shop, yard, and warehouse overhead is the fixed cost of the place where you store material, park and fuel equipment, and run a shop, and all of it belongs in the overhead rate you bid with.
SPM operating model
The SPM operating model is ownership of the cash, WIP, and reporting functions inside a subcontracting business, run on a fixed monthly, weekly, and annual cadence instead of delivered as advice.
SPM trade benchmark
An SPM trade benchmark is a single ratified figure for one trade in one of seven revenue bands, built from CFMA's 2024 and 2025 financial survey data plus a January 2026 specialty trade study for gross margin and overhead, and from a 48 trade master dataset for net profit.
Steel fabrication deposit
A steel fabrication deposit is the 25 to 50 percent of the fabrication contract a fabricator requires at order placement, months before the steel is delivered, installed, or billable.
Stored materials billing
Stored materials billing is a contractual provision in most AIA A401, A401-2017, and ConsensusDocs subcontract forms that lets a subcontractor include the value of stored materials in each pay application, provided the materials meet the documentation requirements and the GC approves it upfront.
Subcontract financial terms
A subcontract is a cash flow document before it's anything else: the financial terms inside it decide how fast you bill, how much gets held back, what you have to sign to get paid, and who can charge what against your work.
Subcontractor invoice management
Subcontractor invoice management is the approval workflow a GC runs on every sub invoice, covering the job and cost code it gets charged to, the lien waiver collected against it, and the timing of the payment relative to what the GC has collected.
Subcontractor payment terms
Subcontractor payment terms are the contract clauses that set when and whether you get paid, and the three common ones, net 30, pay-when-paid, and pay-if-paid, create completely different cash positions from identical work.
Supervision cost
Supervision cost is the compensation paid to foremen, superintendents, and project coordinators, and it belongs to a job rather than to overhead whenever one person spends most of their time on that job.
Supplier payment crisis
A supplier payment crisis is what happens when AR ages faster than AP comes due and billing falls behind procurement, so material invoices go past terms while the work they paid for is still uncollected.
Surety bond
A surety bond is a guarantee from a third party that you'll finish the contract and pay your suppliers, and that the surety will cover the owner's loss if you don't.
Surety bonding program
A surety bonding program is the single project and aggregate limit a surety will write for a contractor, sized off working capital, net worth, and how much the underwriter trusts the WIP schedule.
Surety relationship
A surety relationship is the ongoing information relationship between a contractor and the surety behind its bonds, built on financial statements the surety trusts and a completion record it can verify.
Surety underwriting
Surety underwriting is an assessment of a contractor's character, capacity, and capital, priced against the risk that a bonded project doesn't get finished.
Switching from QuickBooks
The point where QuickBooks stops being enough is the point where job costing by cost code, WIP schedules, and retainage tracking all need workarounds that cost more time and carry more risk than a construction specific platform would.
SWPPP financial management
SWPPP financial management is running an erosion control business on a per site profit and loss rather than a company total, because the book is dozens of small recurring sites and the company average describes none of them.
Systematic underbidding
Systematic underbidding is a bid that misses margin the same way on every job, because the estimate template still carries a stale overhead rate, an old labor burden multiplier, best-case production rates, and no separate line for mobilization.
T&M billing
T&M billing is charging a general contractor for extra work at published hourly labor rates plus material and equipment at cost or an agreed markup, rather than at a fixed price, and it only pays when the ticket is signed.
Time and material billing
Time and material billing is billing for the actual labor hours, materials, and equipment used on a job at agreed rates, instead of one fixed contract price.
Time and materials billing
Time and materials billing is a billing method that charges the actual labor, equipment, and materials a job consumes, plus overhead and profit, instead of a fixed lump sum.
Total prevailing wage
The total prevailing wage is the base wage plus the fringe benefits required by the applicable wage determination, and it's the rate a prevailing wage bid has to be priced off.
Trade-specific CFO
A trade-specific construction CFO is a CFO whose financial work is built on how commercial subcontracting behaves, meaning percentage-of-completion accounting, retainage mechanics, change order billing, and mobilization cash cycles, rather than on a general business framework applied to a contractor.
True cost per employee
True cost per employee is the base wage or salary plus every burden item the business pays on top of it, including FICA, FUTA, SUTA, workers comp, a general liability allocation, health insurance, retirement, and paid time off.
Trust Fund Recovery Penalty
The Trust Fund Recovery Penalty is the IRS mechanism for holding a business owner personally responsible for unpaid payroll taxes, specifically the employee's share of Social Security, Medicare, and withheld income tax.
Unapproved change order
An unapproved change order is directed scope work that a contractor performs before the GC has issued written authorization or executed a change order covering it.
Undercapitalized backlog
Undercapitalized backlog is more signed work than working capital to fund the mobilizations it requires.
Understated overhead rate
An understated overhead rate is a bid input that allocates less overhead to each job than the business is really incurring, which reads as lower than expected net margin even on jobs that performed in the field.
Unit cost
Unit cost is the fully burdened cost of producing one unit of work, such as one cubic yard placed, one linear foot of pipe installed, or one square foot finished.
Unit price production tracking
Unit price production tracking is the measurement of units installed per crew hour against the production rate the bid assumed, by cost code, while the job is still running.
Units per hour
Units per hour is actual output divided by actual hours worked, compared to the estimated units per hour from the bid.
Wage determination
A wage determination is the document attached to every Davis-Bacon contract listing the base hourly rates and fringe amounts by worker classification for the county the work is in.
Weather delay cost
Weather delay cost on a sitework project is the crew standby, equipment idle time, and erosion control maintenance a contractor carries on days when rain stops billable production.
Weekly financial cadence
A weekly financial rhythm is a fixed set of financial tasks done on the same day every week, specifically an AR aging review on Monday, transaction entry by Wednesday, and a 13 week forecast check on Friday.
Weekly job review
A weekly job review is a 15 to 20 minute check on each active job that compares production and cost against the estimate, catches undocumented scope changes, confirms billing is current, and flags anything the owner needs to know.
WIP manipulation
WIP manipulation is the adjustment of cost-to-complete estimates or percentage-complete figures, deliberately or through reluctance to report bad news, to produce a preferred reported outcome rather than an accurate one.
WIP meeting
A WIP meeting is a monthly working session where the person who owns the financials and the people who run the jobs walk every active job and explain why its numbers moved since last month.
WIP reporting
WIP reporting is the monthly work in progress schedule that shows whether each active job is overbilled or underbilled against real progress, calculated using percentage of completion accounting.
WIP reporting for bonding
WIP reporting for bonding is the monthly work in progress schedule presented so an underwriter can read the overbilled and underbilled position on every job against the balance sheet those positions produced.
WIP schedule
A WIP schedule is a report that compares billing to date against the percentage of each job complete, measured by cost incurred against total estimated cost, to show whether that job is overbilled or underbilled.
Work order costing
Work order costing is cost measurement built at the unit a service business repeats: the cost of a work order type, the cost of a technician per billable hour, the cost to serve a recurring agreement, and the cost to run a truck for a day, rather than a full cost build on every individual ticket.
Workers comp classification code
A workers comp classification code is the risk class an insurer assigns to a type of work, and it sets how much premium you pay per dollar of payroll for each employee.
Working capital
Working capital is current assets minus current liabilities: what you could turn into cash inside a year, less what you owe inside a year.
Working capital cost
Working capital cost on a project is the interest or opportunity cost of the capital a contractor deploys between mobilization and the first payment clearing.
Working capital line of credit
A working capital line of credit is a revolving bank facility a subcontractor draws on to bridge a specific identified cash shortfall and repays when the matching collection comes in.
Working capital optimization
Working capital optimization is the work of shortening the time between paying for work and getting paid for it, so the same company runs on less cash.
Working capital requirement of growth
The working capital requirement of growth is the cash a subcontractor has to deploy on mobilization, payroll float, and outstanding AR before the new revenue produces any cash of its own.
Year-end close
The year-end close is the set of reconciliations, accruals, and construction-specific true-ups that turn twelve months of transactions into a financial statement your CPA, your bank, and your surety can all use.
