Q: How can construction businesses ensure ongoing risk management?

Construction businesses take a “ risk management 101 ” approach by implementing proactive risk mitigation strategies, regularly monitoring project progress, maintaining open communication channels and adapting strategies throughout a construction project.

Question 1

How do you handle change orders in construction accounts payable?

Allison Cobb · Accepted Answer

It’s common for accounting teams to accommodate construction change orders by revising invoices and modifying contracts based on change order specifications. This ensures accurate payment for the changed work.

Question 2

What documents are typically required for construction accounts payable?

Allison Cobb · Accepted Answer

Commonly required documents for construction accounts payable include invoices, purchase orders, receipts, lien waivers and signed contracts.

Question 3

How long does it take to process construction accounts payable?

Allison Cobb · Accepted Answer

The time it takes a construction company to process accounts payable can vary depending on the company’s accounts payable process, invoice volume, payment terms and authorization workflows. It’s important to understand this process as you’re agreeing to payment terms to ensure each party is being paid accordingly.

Question 4

What is the difference between accounts payable and accounts receivable?

OGM Staff · Accepted Answer

Accounts Payable (AP) and Accounts Receivable (AR) are two fundamental bookkeeping aspects for a construction business' financial transactions, but they represent different sides of the same coin. Accounts payable is related to the company's obligations to pay others, while accounts receivable pertains to the money the company expects to receive from its customers after construction jobs. Both are crucial for managing a company's cash flow and financial stability.

Question 5

How does construction workforce management improve safety?

Emily Johnson · Accepted Answer

Construction workforce management promotes job site safety by ensuring the right workers and equipment are available when needed, facilitating efficient communication for immediate issue resolution and helping mitigate potential safety risks.

Question 6

How can construction workforce management help with labor shortages?

Emily Johnson · Accepted Answer

Effective workforce management in construction helps optimize resource allocation – including your administrative and construction teams. This helps offset labor shortages by reducing the number of workers needed at a job site. Specifically, efficient scheduling and task management can help improve poor performance and maximize productivity using your available workforce.

Question 7

What are some common construction workforce management challenges?

Emily Johnson · Accepted Answer

Common construction workforce management challenges include difficulty in tracking and managing a large and diverse workforce, employee turnover, coordinating schedules and tasks across multiple projects, and ensuring effective communication and collaboration among team members and subcontractors. These challenges can be addressed with a proven workforce management software like Buildertrend.

Question 8

Why is it important to manage construction risks?

Emily Johnson · Accepted Answer

It’s important to manage construction risks to minimize potential financial losses, project delays and quality issues. This also helps ensure successful project outcomes and client satisfaction.

Question 9

How can businesses identify construction risks?

Emily Johnson · Accepted Answer

Construction businesses can identify risks by conducting comprehensive project assessments, analyzing historical data, consulting with industry experts and leveraging construction company software’s project management and budgeting features.

Question 10

How can construction businesses ensure ongoing risk management?

Emily Johnson · Accepted Answer

Construction businesses take a “risk management 101” approach by implementing proactive risk mitigation strategies, regularly monitoring project progress, maintaining open communication channels and adapting strategies throughout a construction project.

Question 11

What is job costing in construction?

Katrina Meyer · Accepted Answer

Job costing is a way for your construction company to accurately track all costs associated with each job. The total job cost includes labor, materials and overhead. By creating a detailed cost breakdown for the entire project, you can track expenses in real time and assess profitability. The more detailed the breakdown, the more likely you’re able to combat issues early that could affect profit margins.

Question 12

How does job costing for construction work?

Katrina Meyer · Accepted Answer

To calculate job cost for each construction project, you’ll use this formula:

Total job cost = materials + labor + overhead

Question 13

Why is job costing important in construction?

Katrina Meyer · Accepted Answer

Job costing throughout each project is crucial to keeping your company’s profit margins high and the job on track. Through job costing you’re able to compare estimated costs with actual costs so you can target overspending and resolve issues early. It’s important to provide a picture of exactly where your money is going. You can also assess how well you’re managing resources. Overall, job costing ensures your business maintains a healthy cash flow and profit margin.

Question 14

What are some common expenses in construction job costing?

Katrina Meyer · Accepted Answer

Labor, materials and overhead costs all go into the total job cost. Expenses to add to the calculation include labor hours for crew members and subcontractors and material costs like wood, safety equipment and concrete. Lastly, you’ll add in overhead costs, which can include permits, temporary office space or sanitation facilities.

Question 15

What are common construction costing methods?

Katrina Meyer · Accepted Answer

Two common costing methods are job costing and process costing. Job costing is detailed and best for unique projects. It requires intense record-keeping and accounting for every single cost. Process costing is used as a standard pricing approach for mass-producing large volumes of similar goods. It’s used most in manufacturing industries.

Here are the results for "What to look for when you’ve outgrown your construction software"

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Construction accounts payable & how to improve it

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Top 8 workforce management features construction companies need

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COVID-19 and construction series: Northeast U.S. region

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How to improve your construction job costing: Tips & video

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