Construction

  • The benefits of a Tech Stack
  • Understanding software integration
  • Ways to find software that communicates well
  • Well-paired tech stacks save time and money. [/fusion_text][fusion_button link="https://www.foundationsoft.com/learn/the-best-construction-software-tech-stack-for-your-business/?&utm_source=cfma&utm_medium=referral&utm_campaign=ref-sus-cicpac-blog-q2-apr-2024" title="" target="_blank" link_attributes="" alignment_medium="" alignment_small="" alignment="" modal="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" color="default" button_gradient_top_color_hover="" hue="" saturation="" lightness="" alpha="" button_gradient_top_color="" button_gradient_bottom_color_hover="" button_gradient_bottom_color="" gradient_start_position="" gradient_end_position="" gradient_type="" radial_direction="" linear_angle="180" accent_hover_color="" accent_color="" type="" bevel_color="" bevel_color_hover="" border_top="" border_right="" border_bottom="" border_left="" border_radius_top_left="" border_radius_top_right="" border_radius_bottom_right="" border_radius_bottom_left="" border_hover_color="" border_color="" size="" padding_top="" padding_right="" padding_bottom="" padding_left="" fusion_font_family_button_font="" fusion_font_variant_button_font="" font_size="" line_height="" letter_spacing="" text_transform="" stretch="default" margin_top="" margin_right="" margin_bottom="" margin_left="" icon="" icon_position="left" icon_divider="no" hover_transition="none" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset=""]Continue Reading[/fusion_button][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]" target="_blank">Building an Optimal Tech Stack for Your Business

    A tech stack is a cohesive group of software that seamlessly communicates with each other to modernize operations. Your construction clients can use a [...]

    By |2024-04-19T11:38:27-05:00April 19th, 2024|AM Whitepaper, CICPAC, Construction|

    As construction companies explore different ways to keep costs low, more and more contractors are turning to job costing.

    Efficient job costing can lead to improved profitability, enhanced data transparency and better expense tracking. With job costing, contractors are always aware of how much money is moving throughout the project, but implementing a job cost structure can be confusing. That’s why Foundation Software created The Ultimate Guide to Job Costing — an article filled with insights on effective job costing strategies. This article includes details about:
    • How a job cost system tracks spending
    • The different types of job cost reports
    • How to test the effectiveness of your job cost structure
    • How to utilize cost codes
    Profitable construction jobs are the product of well-managed cost systems. Continue reading to see all the benefits of a construction job cost accounting system. [/fusion_text][fusion_button link="https://www.foundationsoft.com/learn/the-ultimate-guide-to-construction-job-costing/" title="" target="_blank" link_attributes="" alignment_medium="" alignment_small="" alignment="" modal="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" color="default" button_gradient_top_color_hover="" hue="" saturation="" lightness="" alpha="" button_gradient_top_color="" button_gradient_bottom_color_hover="" button_gradient_bottom_color="" gradient_start_position="" gradient_end_position="" gradient_type="" radial_direction="" linear_angle="180" accent_hover_color="" accent_color="" type="" bevel_color="" bevel_color_hover="" border_top="" border_right="" border_bottom="" border_left="" border_radius_top_left="" border_radius_top_right="" border_radius_bottom_right="" border_radius_bottom_left="" border_hover_color="" border_color="" size="" padding_top="" padding_right="" padding_bottom="" padding_left="" fusion_font_family_button_font="" fusion_font_variant_button_font="" font_size="" line_height="" letter_spacing="" text_transform="" stretch="default" margin_top="" margin_right="" margin_bottom="" margin_left="" icon="" icon_position="left" icon_divider="no" hover_transition="none" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset=""]Continue Reading[/fusion_button][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]" target="_blank">The Ultimate Guide to Construction Job Costing

    As construction companies explore different ways to keep costs low, more and more contractors are turning to job costing. Efficient job costing can lead [...]

    By |2024-02-14T13:28:46-05:00February 14th, 2024|AM Whitepaper, CICPAC, Construction|

    "In construction, you are continually trying to strike the right balance in so many areas — from crews and equipment, to bids, billings, and job costs. Because they are so important, you want to make those predictive calls based on the story being told by your data, without overly relying on gut feelings and rearview-mirror information, which has been the historical norm." - Bruce Orr, CEO at ProNovos

    [/fusion_text][fusion_text columns="" column_min_width="" column_spacing="" rule_style="" rule_size="" rule_color="" hue="" saturation="" lightness="" alpha="" content_alignment_medium="" content_alignment_small="" content_alignment="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" margin_top="" margin_right="" margin_bottom="" margin_left="" fusion_font_family_text_font="" fusion_font_variant_text_font="" font_size="" line_height="" letter_spacing="1.25" text_transform="" text_color="" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset="" logics=""]

    Explore essential financial concepts and gain insights from industry experts in this eBook, covering job costing, project forecasting, change order management, revenue recognition, billings, and project-level cash flow.

    Inside this eBook, you will discover:

    • Simplified Financial Wisdom: A breakdown of intricate financial concepts into easy-to-digest insights, empowering you to excel in a project’s financial management
    • Expert Insights: Hear from industry experts, including project managers, financial advisors and construction business owners
    • Financial Mastery: Build a solid foundation for cash flow management and profitability
      Advanced Strategies: Discover methodologies and tools to optimize profitability across projects

    [/fusion_text][fusion_button link="https://cicpac.com/wp-content/uploads/2023/11/ConMgrGuidetoFinance-1.pdf" title="" target="_blank" link_attributes="" alignment_medium="" alignment_small="" alignment="center" modal="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" color="default" button_gradient_top_color_hover="" hue="" saturation="" lightness="" alpha="" button_gradient_top_color="" button_gradient_bottom_color_hover="" button_gradient_bottom_color="" gradient_start_position="" gradient_end_position="" gradient_type="" radial_direction="" linear_angle="180" accent_hover_color="" accent_color="" type="" bevel_color="" bevel_color_hover="" border_top="" border_right="" border_bottom="" border_left="" border_radius_top_left="" border_radius_top_right="" border_radius_bottom_right="" border_radius_bottom_left="" border_hover_color="" border_color="" size="" padding_top="" padding_right="" padding_bottom="" padding_left="" fusion_font_family_button_font="" fusion_font_variant_button_font="" font_size="" line_height="" letter_spacing="" text_transform="" stretch="default" margin_top="4%" margin_right="" margin_bottom="4%" margin_left="" icon="fa-arrow-alt-circle-down fas" icon_position="right" icon_divider="no" hover_transition="none" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset=""]Download eBook[/fusion_button][/fusion_builder_column][fusion_builder_column type="1_4" layout="1_4" align_self="auto" content_layout="column" align_content="flex-start" valign_content="flex-start" content_wrap="wrap" spacing="" center_content="no" column_tag="div" link="" target="_self" link_description="" min_height="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" type_medium="" type_small="" flex_grow_medium="" flex_grow_small="" flex_grow="" flex_shrink_medium="" 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background_image_small="" background_image="" background_image_id_medium="" background_image_id_small="" background_image_id="" lazy_load="avada" skip_lazy_load="" background_position_medium="" background_position_small="" background_position="left top" background_repeat_medium="" background_repeat_small="" background_repeat="no-repeat" background_size_medium="" background_size_small="" background_size="" background_custom_size="" background_custom_size_medium="" background_custom_size_small="" background_blend_mode_medium="" background_blend_mode_small="" background_blend_mode="none" render_logics="" sticky="off" sticky_devices="small-visibility,medium-visibility,large-visibility" sticky_offset="" absolute="off" absolute_props="" filter_type="regular" filter_hover_element="self" filter_hue="0" filter_saturation="100" filter_brightness="100" filter_contrast="100" filter_invert="0" filter_sepia="0" filter_opacity="100" filter_blur="0" filter_hue_hover="0" filter_saturation_hover="100" filter_brightness_hover="100" filter_contrast_hover="100" filter_invert_hover="0" filter_sepia_hover="0" filter_opacity_hover="100" filter_blur_hover="0" transform_type="regular" transform_hover_element="self" transform_scale_x="1" transform_scale_y="1" transform_translate_x="0" transform_translate_y="0" transform_rotate="0" transform_skew_x="0" transform_skew_y="0" transform_scale_x_hover="1" transform_scale_y_hover="1" transform_translate_x_hover="0" transform_translate_y_hover="0" transform_rotate_hover="0" transform_skew_x_hover="0" transform_skew_y_hover="0" transform_origin="" transition_duration="300" transition_easing="ease" transition_custom_easing="" motion_effects="" scroll_motion_devices="small-visibility,medium-visibility,large-visibility" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset="" last="true" border_position="all" first="false" spacing_left="1%"][fusion_imageframe image_id="7400|full" aspect_ratio="" custom_aspect_ratio="100" aspect_ratio_position="" skip_lazy_load="" lightbox="no" gallery_id="" lightbox_image="" lightbox_image_id="" alt="" link="" linktarget="_self" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" max_width="" sticky_max_width="" align_medium="none" align_small="none" align="none" mask="" custom_mask="" mask_size="" mask_custom_size="" mask_position="" mask_custom_position="" mask_repeat="" style_type="" blur="" stylecolor="" hue="" saturation="" lightness="" alpha="" hover_type="none" magnify_full_img="" magnify_duration="120" scroll_height="100" scroll_speed="1" margin_top_medium="" margin_right_medium="" margin_bottom_medium="" margin_left_medium="" margin_top_small="" margin_right_small="" margin_bottom_small="" margin_left_small="" margin_top="" margin_right="" margin_bottom="" margin_left="" bordersize="" bordercolor="" borderradius="" z_index="" caption_style="off" caption_align_medium="none" caption_align_small="none" caption_align="none" caption_title="" caption_text="" caption_title_tag="2" fusion_font_family_caption_title_font="" fusion_font_variant_caption_title_font="" caption_title_size="" caption_title_line_height="" caption_title_letter_spacing="" caption_title_transform="" caption_title_color="" caption_background_color="" fusion_font_family_caption_text_font="" fusion_font_variant_caption_text_font="" caption_text_size="" caption_text_line_height="" caption_text_letter_spacing="" caption_text_transform="" caption_text_color="" caption_border_color="" caption_overlay_color="" caption_margin_top="" caption_margin_right="" caption_margin_bottom="" caption_margin_left="" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset="" filter_hue="0" filter_saturation="100" filter_brightness="100" filter_contrast="100" filter_invert="0" filter_sepia="0" filter_opacity="100" filter_blur="0" filter_hue_hover="0" filter_saturation_hover="100" filter_brightness_hover="100" filter_contrast_hover="100" filter_invert_hover="0" filter_sepia_hover="0" filter_opacity_hover="100" filter_blur_hover="0"]https://cicpac.com/wp-content/uploads/2023/11/Cover_A-Construction-Managers-Guide-to-Project-Financials.jpg[/fusion_imageframe][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

    " target="_blank">A Construction Manager’s Guide to Project Financials

    "In construction, you are continually trying to strike the right balance in so many areas — from crews and equipment, to bids, billings, and [...]

    By |2023-11-10T13:12:33-05:00November 10th, 2023|AM Whitepaper, CICPAC, Construction|

    Abby Massey of Calvetti Ferguson (Tax Incentive Director from Houston, TX) for this recap from a recent CICPAC webinar. 

    The Inflation Reduction Act was passed in 2022 and introduced several energy efficient tax incentives. For most taxpayers and CPAs these incentives can seem complicated at first glance. So how do these incentives work and what is the best way for a taxpayer to ensure they can claim them? Below we will dive into two popular incentives, requirements for maximizing the value, and practical tips for identifying eligible projects.

    The Investment Tax Credit (ITC)

    The Investment Tax Credit is available to those who install qualified energy property, such as solar panels or geothermal heat pumps. The credit is a percentage of the qualified energy property basis, or 6% at the base rate. If the project meets prevailing wage & apprenticeship requirements or generates less than 1 MW of electricity, the credit increases to a bonus rate of 30%. Additional value (base = 2%/bonus = 10%) can be added on for meeting domestic content, energy community, or low-income community requirements. If a project meets all requirements, a maximum credit of 70% can be achieved.

    The Inflation Reduction Act also introduced new rules that allow government and tax-exempt entities to benefit from this tax incentive. These entities can claim the credit through the direct pay method, which would allow them to receive a check from the Treasury in the amount of the credit. In addition, these credits can be transferred or sold to eligible buyers.

    Energy Efficient Commercial Buildings Deduction (Section 179D)

    The Energy Efficient Commercial Buildings Deduction is a tax deduction available to those who install HVAC and hot water, interior lighting, or building envelope systems into new or existing commercial buildings. The Section 179D program is eligible for a base rate of $0.50 - $1.00 per square foot. If prevailing wage and apprenticeship requirements are met on the project, the deduction increases to $2.50 - $5.00 per square foot. The deduction amount is determined through an energy modeling analysis, which compares the building to a baseline standard as outlined in ASHRAE 90.1-2007. An alternative method was introduced by the IRA, which determines a deduction based on a before-and-after look of a building that underwent an energy-efficient retrofit.

    Section 179D is available to taxpayers who newly construct or renovate their existing properties. Architects, engineers, and contractors can also claim this deduction for work performed on government or tax-exempt buildings.

    Prevailing Wage & Apprenticeship Requirements

    Prevailing wage & apprenticeship requirements impact many of the incentives included in the Inflation Reduction Act. Complying with these requirements means significantly larger incentives. To comply, all laborers and mechanics employed by the taxpayer, or their contractors, must be paid prevailing wages in the location of the project. For the ITC, this includes alteration or repair projects that occur 5 years after the initial project.

    In addition, all eligible projects must participate in registered apprenticeship programs. A percentage of the total labor hours should be worked by qualified apprentices. The total apprentice labor hours in 2023 should equal 12.5% or more of the total hours. This percentage increases to 15% in 2024.

    It’s important to identify potential projects early to maximize the benefit from these incentives. Taxpayers and their CPAs should be discussing future plans to implement new construction or energy efficient projects. Cost segregation studies or clean energy loans, such as C-PACE, are good indicators that other incentives may be available to claim. Involve a trusted tax incentive specialist early who can further identify eligible projects and educate the team on the requirements. In the case of Section 179D other licensed individuals, such as a Professional Engineer, are required to certify the tax deduction. Having an experienced team of professionals will ensure a smooth and compliant tax incentive process.

    About the Author

    Abby Massey, Tax Incentives Director, Calvetti Ferguson

    Abby has more than 13 years of professional expertise, with six years dedicated to tax incentive consulting and seven years in engineering and commercial building design. She earned her Bachelor of Science in Civil Engineering from Purdue University and has experience collaborating with clients in various industries, including construction, building design, manufacturing, and energy. Abby specializes in energy-efficient commercial building tax incentives, Section 179D tax deductionsresearch and development tax credits, and cost segregation studies

    " target="_blank">Inflation Reduction Act Incentives

    Thanks to Abby Massey of Calvetti Ferguson (Tax Incentive Director from Houston, TX) for this recap from a recent CICPAC webinar.  The Inflation Reduction Act [...]

    By |2023-10-17T14:40:33-05:00October 17th, 2023|CICPAC, Construction|

    As published in ENR 10/2/23, authored by Mike Karlins, CPA, CRIS, Senior Client Advisor, American Global After years of discussion, revisions and a pandemic-induced delay, the Financial Accounting Standards Board (FASB) finally brought the new lease accounting rule, ASC 842 (Accounting Standards Codification 842), to the forefront. Prior to the implementation of ASC 842 (which became effective for private companies in years beginning after December 15, 2021), lease accounting required companies to classify leases as either operating or capital. Operating leases were not recorded on the balance sheet, which led to the potential understatement of a company’s liabilities and overstatement of its financial performance. ASC 842 aims to address those issues and achieve the four following objectives:
    • Increased Transparency: Under ASC 842, both operating leases and finance (capital) leases are required to be recognized on the balance sheet, enhancing transparency, and ensuring that financial statements more accurately reflect a company’s financial position and obligations.
    • Improved Comparability: The standard’s more consistent methodology provides a better framework for recognizing and measuring lease assets and liabilities, which allows stakeholders to better compare financial information across companies in the same industry.
    • Improved Risk Assessment: With a more comprehensive view of lease obligations, sureties can better assess a firm’s financial risk and its ability to handle lease-related expenses.
    • Enhanced Decision-Making: With lease obligations explicitly stated on the balance sheet, investors, creditors and other users of financial statements can make more informed decisions about a company’s financial health, its ability to meet future lease payments, its capacity to complete projects and its overall lease-related risk exposure.
    The question for the construction industry is, then, with these changes, do surety underwriters now view a contractor’s financial statements differently? After speaking with staff experts and several underwriters from the surety industry, the answer appears to be a resounding “no.” Many stated that footnotes to financial statements included future lease payments, therefore, surety underwriters were already including those figures in their analysis of short-term and long-term obligations. So, while for some industries the implementation of ASC 842 may have been significant, for contractors, the new lease accounting rules were a non-event, more optical than substantive. Sureties seem to have taken the position that there has been no change in the contractor’s business, so why should our underwriting change?

    About American Global

    American Global is one of the largest privately held insurance and surety brokerage firms in the U.S., specializing in all aspects of construction risk management. They support contractors, owners, and developers throughout the entire scope of their project and across every milestone of their business, protecting against the risks and exposures specific to the construction industry. American Global has multiple offices across the United States, as well as in Canada, England, and Italy, to serve clients throughout North America, Latin America, the United Kingdom and Europe. [/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]" target="_blank">New Lease Accounting Standard and the Impact on Surety Underwriting 

    As published in ENR 10/2/23, authored by Mike Karlins, CPA, CRIS, Senior Client Advisor, American Global After years of discussion, revisions and a pandemic-induced [...]

    By |2023-10-06T14:34:50-05:00October 6th, 2023|AM Whitepaper, CICPAC, Construction|

    A look at 10 best practices contractors should be looking at to modernize and stay relevant in this new age of construction Construction projects grow in magnitude and complexity every year, demanding more time, resources and creativity from contractors. The business of  construction used to rely on traditional building processes and tools—pen and paper, faxes, emails, spreadsheets—but these methods can no longer keep up with modern construction’s increasingly complex projects and demands for real-time data and workflows. It took a while for construction management to come around, but now it’s widely accepted that the old ways of doing things just won’t work anymore. Veterans of the industry realize that a tech-focused approach is the only way to complete their projects on time and meet client expectations. This mentality shift has led contractors to:
    • Digitize documentation to cut needless paper out of the equation
    • Implement cloud technologies to instantly share data and streamline workflows
    • Implement modern reporting and data analytics tools for optimized decision-making
    • Use mobile applications to open access to data and improve workflows in the field
    • Add new technologies that automatically complete essential daily tasks, including payroll, HR, invoicing, data collection, and other processes that previously took multiple steps and people to complete
    [/fusion_text][fusion_button link="https://cicpac.com/wp-content/uploads/2023/06/10-Construction-Best-Practices_USL_0623.pdf" title="" target="_blank" link_attributes="" alignment_medium="" alignment_small="" alignment="" modal="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" class="" id="" color="default" button_gradient_top_color_hover="" hue="" saturation="" lightness="" alpha="" button_gradient_top_color="" button_gradient_bottom_color_hover="" button_gradient_bottom_color="" gradient_start_position="" gradient_end_position="" gradient_type="" radial_direction="" linear_angle="180" accent_hover_color="" accent_color="" type="" bevel_color="" bevel_color_hover="" border_top="" border_right="" border_bottom="" border_left="" border_radius_top_left="" border_radius_top_right="" border_radius_bottom_right="" border_radius_bottom_left="" border_hover_color="" border_color="" size="" padding_top="" padding_right="" padding_bottom="" padding_left="" fusion_font_family_button_font="" fusion_font_variant_button_font="" font_size="" line_height="" letter_spacing="" text_transform="" stretch="default" margin_top="20px" margin_right="" margin_bottom="20px" margin_left="" icon="" icon_position="left" icon_divider="no" hover_transition="none" animation_type="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" animation_offset=""]Continue Reading[/fusion_button][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]" target="_blank">10 Construction Best Practices You Should Be Doing Right Now

    A look at 10 best practices contractors should be looking at to modernize and stay relevant in this new age of construction Construction projects [...]

    By |2023-07-25T15:46:20-05:00June 30th, 2023|AM Whitepaper, CICPAC, Construction|

    Tyler Mains, CPA/ABV, Managing Director and Demetri Pazarentzos, Director for their article. Check out bios on Tyler or Demitri via the Lazear Capital Partners website. An Employee Stock Ownership Plan (ESOP) is a great solution for owners of construction companies looking to diversify their personal wealth, develop a succession plan, and/or seek an avenue to reward their employees. However, there are many factors to consider when a company who utilizes bonding is exploring or undertaking an ESOP. Because the surety relationship is vital to the operations and long-term success of many contractors, it is important to partner with the surety early in the ESOP process. The surety is focused on supporting a company’s current and future bonding needs, while reducing or mitigating any potential risk. A leveraged ESOP can cause changes to the structure of a company’s balance sheet as a result of the likelihood of additional debt used to assist in financing the ESOP transaction. If the transaction and associated financing is structured correctly, the perfect balance of financial benefits to company owners, significant upside for key management and employees, and a favorable structure for both the surety and the lender can be achieved. The following items should be considered for companies with surety relationships during an ESOP formation:
    1. Advisors – surrounding the company with knowledgeable advisors who are well-versed in both the construction industry and ESOP transactions is key to ensuring a favorable transaction structure that maximizes benefits for the company owners, while maintaining flexibility for the company post-closing.
    2. Bank and Surety – running a parallel track with open communication to understand each stakeholders concerns or needs (i.e., “giving a seat at the table” early in the ESOP transaction process) leads to a structure that provides adequate financing to consummate the transaction, significant flexibility to support future working capital and capital expenditure requirements of the company, and maintains ample balance sheet strength to support ongoing bonding needs.
    3. Current Bonding Program – evaluating the following items of a company’s bonding program is important to aid in the surety’s analysis of bonding needs moving forward, which can have a significant impact on the surety’s comfort level in regards to balance sheet changes and financing proposed in the ESOP transaction: - Individual and aggregate project bonding limits - Accounts receivable and projects currently bonded (remaining work to be completed vs. total contract value) - Makeup of bonded vs. unbonded projects in backlog and pipeline - The timing and phases of bonded projects (planning/design phase vs. true construction underway) - Current and future working capital and equity levels (as adjusted for specific components found in an ESOP structure)
    4. Managing Personal and Corporate Guarantees – with owners of the company transitioning their ownership to the ESOP trust, special consideration to current and future guarantees required should be discussed during the transaction. An understanding of expectations of the bank or surety regarding guarantees and changes to these requirements (and the timing of these potential changes) is key to mitigating personal exposure for owners who may no longer have an ownership stake in the company.
    Overall, a surety is focused on the continuity of the business, with particular attention to adequate financial strength and liquidity and management retention post-ESOP transaction. When structured correctly, an ESOP can be a powerful tool to aide in the long-term succession plan for construction companies and make an extremely positive impact on the lives of employees, key management, and company owners. Additionally, an ESOP-owned company can provide productivity improvements, tax benefits, and a clear competitive advantage in the labor market, all of which can be expected to drive financial performance. Our professionals are here to advise you on structuring a favorable ESOP transaction with lenders and your surety, while maximizing benefits for selling company owners.  " target="_blank">Four Considerations for Construction Companies Exploring or Undertaking an ESOP

    Thanks to Tyler Mains, CPA/ABV, Managing Director and Demetri Pazarentzos, Director for their article. Check out bios on Tyler or Demitri via the Lazear Capital [...]

    By |2023-05-30T14:08:05-05:00May 30th, 2023|AM Whitepaper, CICPAC, Construction|

    Alexander Bagne, CPA, JD, MBA, CCSP is the President of ICS Tax, LLC, and an expert in tax planning strategies for real estate investors, architecture and engineering firms, and others within the construction industry. He is a strong proponent of energy efficient construction and has served as the President of the American Society of Cost Segregation Professionals (ASCSP). This article was re-published from ICS-tax.com ‘The Inflation Reduction Act Significantly Changes the 179D Energy Efficient Commercial Building Deduction’" target="_blank">Section 179D Energy Efficient Commercial Building Deduction

    The Section 179D Energy Efficient Commercial Building Deduction provides a deduction of up to $1.88 per square foot for both building owners who construct new [...]

    By |2023-02-22T16:10:47-05:00September 19th, 2022|AM Whitepaper, CICPAC, Construction|

    The Inflation Reduction Act of 2022, H.R. 5376, signed by President Biden on August 16, 2022, extended the 45L credit for homes sold or leased during 2022 with little modification. Thus, residences sold or leased in 2022 would qualify for the 45L credit using the 2021 energy efficiency standards. However, from January 1, 2023 through December 31, 2032, the Act significantly changes the 45L Energy Efficient Home Credit with new provisions and requirements. Beginning in 2023, the Act provides an increased 45L tax credit of $2,500 for single family and manufactured homes when constructed according to the standards set by the ENERGY STAR Residential New Construction Program or the Manufactured Homes Program.
    • Single-family homes must meet the ENERGY STAR Single Family New Homes Program, Version 3.1 for homes constructed before January 1, 2025 and Version 3.2 thereafter.
    • Manufactured homes must meet the latest ENERGY STAR Manufactured Home National Program requirements as in effect on the latter of January 1, 2023 or January 1 of two calendar years prior to the date the dwelling is acquired.
    The Act also provides an even higher 45L tax credit of $5,000 for single family and manufactured homes when they are certified as a DOE Zero Energy Ready Home (ZERH). For multifamily homes constructed after 2022, the Act provides a 45L tax credit of $500 when meeting the ENERGY STAR Single Family New Homes Program or $1,000 when meeting the DOE Zero Energy Ready Home requirements. If prevailing wage requirements are also satisfied, the credit for multifamily homes increases to $2,500 or $5,000, respectively. The table below summarizes the 45L Credit rules beginning in 2023.
    Home TypeQualification RequirementPrevailing Wage RequirementCredit Amount
    Single Family*EnergyStarNo$2,500
    Single Family*ZERHNo$5,000
    Manufactured HomeEnergyStarNo$2,500
    Manufactured HomeZERHNo$5,000
    MultifamilyEnergyStarNo$500
    MultifamilyZERHNo$1,000
    MultifamilyEnergyStarYes$2,500
    MultifamilyZERHYes$5,000
    *Single Family includes site-built and modular single family homes, duplexes and townhomes.
    The Inflation Reduction Act of 2022 has certainly raised the standards for energy efficient home construction with a persuasive tax credit for the next ten years.
    This article was re-published from ICS-tax.com ‘The Inflation Reduction Act: Impact on §45L Tax Credit’

    About the Author:

    Alexander Bagne, CPA, JD, MBA, CCSP is the President of ICS Tax, LLC and an expert in tax planning strategies for real estate investors and developers. He is a proponent of energy efficient construction and has served as the President of the American Society of Cost Segregation Professionals (ASCSP).
    " target="_blank">The Inflation Reduction Act: Impact on §45L Tax Credit

    Internal Revenue Code Section 45L provides both single and multifamily homebuilders with a $2,000 tax credit for meeting certain energy saving requirements. However, the 45L [...]

    By |2023-02-22T16:10:56-05:00August 19th, 2022|AM Whitepaper, CICPAC, Construction|

    construction accounting that will help increase job profitability, manage cash flow, and successfully grow your business.

    #1 USE JOB COSTING

    At the end of each day, a contractor needs to use job costing to allocate the cost of equipment, tools, and other assets used on a job (e.g., the cost of owning, operating, and maintaining that asset) to keep score of their jobs and business overall. Any easy way to do this is through a robust construction accounting software solution, such as Deltek + ComputerEase.

    #2 TRACK COMMITTED COSTS DAILY

    Costs already committed for subcontractors and materials should be tracked in real-time to maintain control over a job and keep it profitable. You will know, with certainty, the budget you have available for future expenses and/or additional costs. Some examples of committed costs include an open subcontractor agreement, purchase orders, time from the field, and expenses from the field.

    #3 UNDERSTAND THE DIFFERENCE BETWEEN MARGIN AND MARKUP

    Markup is the difference between the cost of materials or services and the price charged. Margin is the gross profit on a job and is a percentage of the sales price. Mistaking the two terms may cause you to set a price too high or too low, which can result in losing profits and potentially, business.

    #4 DISTINGUISH BETWEEN PERCENTAGE SPENT AND PERCENTAGE OF COMPLETION

    If you’ve spent half your budget that does not necessarily mean you have done half the work. You may have done only 40% of the work, or maybe 60% of the work. Understanding and tracking percentage spent and percentage of completion through your WIP reports allows you to come in under budget.

    #5 RUN FREQUENT WORK IN PROGRESS (WIP) REPORTS

    WIP reports are one of the most important reports for a contractor because they provide a detailed schedule on completed work and in-progress work for a certain period of time. With frequent WIP reports, you can manage work and profit proactively using actual job data as opposed to being reactive to problems that arise. This helps you stay ahead of the game and grow your bottom-line profits. The commonly used WIP methods include units complete, percent complete, and cost-to-finish. WIP reports also identify underbilling and overbilling amounts. The accounting staff must enter these amounts on the P&L Statement and Balance Sheet to get an accurate financial picture.

    #6 IDENTIFY OVERBILLINGS VS PROFIT

    Overbilling occurs when a contractor bills ahead of work completed. If managed properly, overbilling can positively affect cash flow. If unmanaged, it can be problematic because contractors will not have the available cash to fund the remaining work. For example, if you overbill by $10,000, that is not a cash profit that you can spend. That amount should be recognized as payment for work that has not yet been completed.

    #7 MANAGE YOUR CHANGE ORDERS SUCCESSFULLY

    Change orders are a product of changing the scope of the initial contract. To successfully manage your change orders, it is important to provide contracts that are detailed and easy-to-understand, introduce the change order process in the initial contract (and negotiate pricing and markups for change orders), and establish the structured process for change requests, both with the client and your internal team. Since change orders occur so often in the construction industry, creating change order templates for customers and exploring construction accounting software tools will save you time, rather than manually creating change orders at the time they are needed.

    #8 MONITOR UNPOSTED PAYROLL

    Standard accounting software lacks the ability to track unposted construction payroll. However, monitoring these costs in real-time with a project management software allows you to manage costs proactively by seeing the effect of employee hours on the budget without actually processing payroll.

    #9 TRACK LABOR HOURS EACH DAY

    You want workers to turn in their time at the end of each day, not the next day, not a week later. Tracking things as they happen with remote field-to-office tools, like the Deltek + ComputerEase mobile app, makes them more accurate and you don’t have to return to the office to do this.

    #10 CHOOSE THE RIGHT CONSTRUCTION ACCOUNTANT

    The unique accounting requirements a contractor is faced with almost always call for a CPA that specializes in construction. Choosing the right Certified Public Accountant (CPA) is a critical step to building out your trusted advisor team and can be a major contribution to business growth. Locate a CICPAC member firm near you." target="_blank">10 Key Construction Accounting Best Practices for Contractors

    Construction accounting is complex and mistakes are inevitable. That’s because construction accounting, compared to regular accounting, has unique requirements, processes, documents, and procedures, such as [...]

    By |2023-03-28T16:40:33-05:00August 15th, 2022|AM Whitepaper, CICPAC, Construction|
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