Financial Terms


Construction business glossary defining the most used terminology in the industry
The initial cost estimate prepared at the beginning of a construction project before any changes or variations.
Comparing your financial results against industry standards.
A review and comparison of bids submitted by different contractors for a construction project.
A bond submitted with a construction bid as a guarantee that the bidder will enter into a contract if awarded the project.
A form of surety bond that guarantees the successful bidder will enter into a contract if awarded the project.
The maximum amount of the bid bond that the surety company is obligated to pay if the bidder fails to honor their bid.
A report that compares bids from different vendors to determine the best value for a project.
The increase in bid prices due to competitive bidding or external market factors.
A report that evaluates the profitability of a company's bids by comparing the bid price to the estimated cost.
Evaluating market conditions and competitor behavior before submitting a construction project bid.
An evaluation of the cost components and pricing strategies used by competitors in construction project bidding.
An illegal practice where contractors collude to manipulate bidding processes, resulting in higher prices.
A deposit or surety bond submitted by bidders to guarantee their commitment to a construction project if awarded.
The practice of sharing a subcontractor's or supplier's bid with other bidders to get lower prices.
A report that shows the percentage of bids won compared to bids submitted.
A summary of bids received from various contractors for a construction project, providing a comparative overview.
A plan and approach for submitting competitive and profitable construction project bids.
A detailed document that lists all the materials, quantities, and associated costs required for a construction project.
The percentage of billings collected in relation to the total amount billed on a construction project.
Payroll records submitted every two weeks on government-funded construction projects to comply with prevailing wage laws.
Obtaining performance and payment bonds as a guarantee that a construction company will complete the project as specified and pay subcontractors and suppliers.
The maximum amount of surety bonds a construction company can obtain based on its financial strength and performance history.
A report that assesses a company's ability to raise capital through debt.
Accounting for construction bonds and insurance premiums and claims.
A report that shows the point at which total revenue equals total costs, indicating no profit or loss.
The level of construction activity at which total costs equal total revenue, resulting in neither a profit nor a loss.
When the actual expenses exceed the approved budget for a construction project.
A report that evaluates how well an organization is meeting its financial goals and objectives.
A report comparing planned expenses to actual expenses, showing differences between the two.
Coverage that compensates a construction company for lost income or profits due to unexpected disruptions.
Valuing a construction business for sale, merger, or acquisition.
The process of distributing funds or investment capital to different construction projects or business units.
A long-term, tangible asset used in construction operations, such as land, buildings, or heavy machinery.
The process of evaluating and selecting construction projects based on their potential return on investment.
A report that evaluates potential investments and their expected returns.
Substantial improvements made to construction assets, such as renovations or upgrades.
A long-term plan outlining investments in construction projects and infrastructure improvements.
A lease arrangement where the lessee assumes ownership and accounting responsibility for the leased construction asset.
The process of recording costs as assets on the balance sheet instead of expensing them immediately.
A contract with a maximum price that cannot be exceeded, even if the actual costs are higher.
A projection of expected cash inflows and outflows over a given period of time.
A projection of expected cash inflows and outflows for a construction project over a specific period.
A financial strategy used to protect against adverse cash flow fluctuations caused by changes in interest rates or currency exchange rates.
Construction projects often have long timelines and cash flow management is key to ensuring the ongoing viability of the project and the company.
A financial statement showing the movement of money in and out of a business over a period of time.
A financial statement that shows the sources and uses of cash in a construction company during a specific accounting period.
The practice of withholding a portion of each progress payment and paying it out in cash rather than retaining it as an asset.
The process of returning retained funds to the contractor upon completion of the construction project.
A document issued by a local government agency, certifying that a building is compliant with building codes and suitable for occupancy.
Payroll records that are verified and certified to ensure compliance with prevailing wage laws and labor standards on government-funded construction projects.
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