AGÕæÈËÓÎÏ·

A Job Cost Structure in the construction industry refers to the detailed categorization and allocation of costs associated with a specific construction job or project. These costs are typically divided into direct and indirect costs. Direct costs include materials, labor, and equipment used specifically for the project. Indirect costs, also known as overheads, include costs that support the project such as administrative expenses, insurance, and utilities. The job cost structure enables managers to monitor project expenses closely, helping in managing budget and ensuring project profitability. It is a fundamental element in construction project management, improving cost control and financial accuracy.

A unit price contract is a widely used pricing model in the construction industry where general contractors (GCs) provide a fixed price for each unit of work and material (based on the anticipated quantities specified by the client). The final contract amount is calculated by multiplying the pre-agree unit prices by the actual quantities used or work performed.

This approach allows for flexibility as the total costs adjust to reflect actual usage. Therefore, unit price contracts are ideal for projects with uncertain material and work quantities, helping avoid cost overruns due to miscalculations.

For subcontractors, there are specific considerations when working with unit price contracts. It’s crucial to ensure precise unit price calculations to maintain profitability and implement sound systems for tracking and reporting actual quantities. Clear communication with the GC about quantity changes is also important, and subcontractors should be prepared to justify any discrepancies that may occur.

Siteline—an intuitive A/R management system—simplifies unit price billing for subcontractors, allowing them to:

• Easily input and update unit prices;
• Automatically calculate billing amounts based on reported quantities; and
• AGÕæÈËÓÎÏ· accurate, detailed pay applications that show up-to-date unit prices and quantities.

Ready to optimize your unit price billing process? Contact Siteline today to learn how our solution enhances A/R workflows to accelerate payments.

General and Administrative Costs (G&A) in the construction industry refer to expenses associated with day-to-day operations that are not directly tied to a specific project. These are necessary costs for a business to operate but are not easily assignable to a particular construction job. They typically include office rent, utilities, office supplies, insurance, legal fees, accounting services, salaries of non-project related staff, and other management expenses. It's important for construction businesses to carefully manage G&A costs as they can significantly impact the profitability if not monitored and controlled carefully. These costs are usually spread proportionately across various projects, based on some measure like total project labor costs. A high amount might indicate inefficiency, while a very low amount could suggest underinvestment.