Receiving multiple construction bids is often a moment of mixed emotions for homeowners. While competitive pricing is welcome, the reality is that bids from different contractors rarely offer an apples-to-apples comparison. Some proposals include detailed line items covering every aspect of the work, while others present a lump sum with minimal breakdowns. Some contractors include […]
Insurance Requirements General liability insurance covers claims for bodily injury and property damage from construction operations. The policy provides defense costs and settlement payments for covered claims. The limits of liability are typically $1 million per occurrence and $2 million aggregate for general contractors. Workers compensation insurance provides medical benefits and wage replacement for workers
Quality Management Systems The ISO 9001 standard establishes the requirements for a quality management system that can be certified by an independent organization. The standard requires documented procedures for quality planning, quality control, quality assurance, and quality improvement. The plan-do-check-act cycle provides the framework for continuous improvement of the quality management system. The internal audits
Contract Type Selection Lump sum contracts provide a fixed price for the specified scope of work, transferring cost risk to the contractor. Cost-plus contracts reimburse the contractor for actual costs plus a fee, with the owner bearing cost risk. The guaranteed maximum price contract sets an upper limit on cost, with the contractor sharing savings
Construction Data Analytics Data analytics in construction uses project data to improve decision-making and performance. The project data from cost estimates, schedules, field reports, and equipment tracking systems provides a rich source of information for analysis. Descriptive analytics summarizes historical performance using metrics such as cost variance, schedule variance, productivity rates, and safety incident rates.
Construction Bonds and Surety Construction bonds are three-party agreements between the owner, the contractor, and the surety company that guarantee the contractor performance and payment obligations. The bid bond guarantees that the contractor will enter into the contract if awarded the project and will provide the required performance and payment bonds. The bid bond amount
Digital Estimating Tools Construction estimating software automates the quantity takeoff and cost estimating process. Digital takeoff tools import electronic plans and allow estimators to measure quantities directly on screen. The measurements are automatically calculated and transferred to the estimate. The cost databases in estimating software maintain current prices for labor, materials, and equipment from supplier
Building Code Requirements The International Building Code is the model code adopted by most states and local jurisdictions for regulating building construction. The code establishes minimum requirements for structural safety, fire protection, accessibility, energy efficiency, and other aspects of building performance. The code is updated on a three-year cycle to incorporate new knowledge and technologies.
Construction Accounting Methods Construction accounting differs from general accounting because of the long-term nature of construction projects and the need to match revenues with costs over the project life. The percentage of completion method recognizes revenue and expenses as the project progresses based on the percentage of work completed. The percentage complete is determined by
Construction Labor Relations Labor relations in construction involve the relationships between employers and workers, including the negotiation and administration of collective bargaining agreements. The Davis-Bacon Act requires that workers on federally funded construction projects be paid prevailing wages determined by the Department of Labor. Prevailing wages are based on the wages paid to the majority
