Going through a construction project might be challenging, especially when a team is just starting. For a big-scale or small-scale construction project, thorough planning, coordination, and analysis are needed before you start to break ground.
Estimating and accounting are two departments that each play an important role in the success of a construction project.
The estimating department has its main objective in a construction company. The team prepares the construction cost estimates that allow the contractor to choose profitable work through a competitive bidding process. Additionally, the team’s goal is to provide accurate information to the project developers about the estimated cost of the project. This includes labor rates, material prices, equipment costs, subcontractor costs, and other indirect costs.
The accounting department of a construction company differs from regular business accounting. Accounting in the construction sector is responsible for a lot more than just handling accounts payable and receivable, tracking revenues, processing payroll, and maintaining financial management. Compliance is essential, especially with Davis-Bacon Act standards in line with the going rate in the neighborhood where the project is located.
The accounting team also deals with retention, job costing, change orders, progress billings, customer deposits, and other anomalies involving the construction project. These add to the long list of responsibilities that the department handles, which require special processes.
Estimating may be the most important part to help protect the profit margin. Accounting has to be the most important part of being in compliance. Not to confuse the two, but both parties are equally important in construction projects.
