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Actual Cost
What is Actual Cost?
Actual cost, in the construction industry, refers to the accurate amount reasonably spent on a project. This includes every expense incurred during the planning, development, and execution phases. The actual cost often encompasses material expenses, labor charges, equipment costs, and any additional overhead related to the project. For instance, the cost of bricks, cement, construction tools, and an hourly wage for workers constitutes the actual cost. It may differ from the estimated cost due to unforeseen circumstances or changes in the project scope. Monitoring the actual cost is vital for maintaining a project's budget and preventing financial oversights.
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Other construction terms
What is a Lender?
A construction lender is a bank or financial institution that provides short-term financing specifically for construction companies, developers, and builders working on construction and development projects. In commercial construction, these lenders control project cash flow by deciding when and how much money gets released throughout a project. Instead of providing all funding upfront, they release funds in phases as work gets completed and milestones are hit, which affects everyone involved in the project—especially subcontractors.
Here's how it works for commercial subcontractors: the lender has to approve each payment before the general contractor gets their money, and only then can the GC pay their subs. This means subcontractors are essentially waiting in line behind both their GC and the lender's approval process, which can stretch out payment timelines well beyond what's written in their contracts.
Construction lenders also require extensive paperwork before releasing funds, including lien waivers from all project participants and current insurance certificates. If any documentation expires or goes missing, it can freeze the entire payment process. This means subcontractors must stay organized with their accounts receivables, match their progress billing to lender draw schedules, and keep track of compliance deadlines for themselves and any lower-tier vendors and suppliers.
Siteline streamlines these A/R workflows by centralizing lien waiver tracking and submission, helping subcontractors prevent costly payment delays caused by missing documentation. Learn more here.
What is a Field?
A field in the construction industry refers to a physical area or a project site where construction activities take place. These fields are typically outdoors, such as building sites or highway projects, and can range from open spaces to restricted and confined areas. Fieldwork involves various construction tasks like excavation, foundation setting, erecting structures, piping, and landscaping. Field operations are significant in shaping the entire construction project, influencing cost, time, quality, and safety. It's important to note that the field is where the practical application of engineering designs happens, turning blueprints into reality.
What is a General Ledger (G/L)?
A General Ledger (G/L) in the construction industry is a fundamental financial tool for recording all financial transactions of a construction company including assets, liabilities, equity, revenue, and expenses. It not only reflects every financial transaction related to a construction project, but also contains crucial details such as date, description, and transaction amount. Essentially, the G/L acts as the core of a construction company's financial record system where all transaction data from sub-ledgers or modules, such as accounts payable, accounts receivable, and cash management, are consolidated. It provides a comprehensive financial picture necessary for reporting and strategic decision-making in the construction business. By regularly maintaining and auditing the G/L, construction companies can ensure financial accuracy and compliance, as well as evaluate their financial performance and stability.
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