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Applied Overhead
What is Applied Overhead?
Applied overhead, in the context of the construction industry, refers to the allocation of indirect costs incurred during the construction project. These costs can include utilities, rent, salaries of non-project staff, equipment depreciation, or insurance. These costs do not directly contribute to a specific project but rather the operation of the business as a whole. In construction, these costs are typically distributed to each job based on a formula that might involve labor costs, materials cost, or some other fair measure. Understanding applied overhead is integral to accurate job costing and ensuring a construction project's profitability. Managing and accurately tracking these expenses can mean the difference between a successful construction project and one that loses money. Hence, applied overhead is a crucial financial aspect of any construction project.
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Other construction terms
What is Accrued Revenue?
Accrued revenue is the income a subcontractor has earned for work performed or in progress but has not yet billed (the general contractor or client) or received payment for. This typically happens due to the nature of construction contracts, where payments are often tied to milestones or project completion.
Example: An electrical subcontractor working on a large commercial building is paid based on completed milestones, with invoices due at the end of each month. By June 30th, they've finished 75% of the $100,000 job, but can't invoice until month-end. The $75,000 earned but not yet invoiced is their accrued revenue.
Tracking accrued revenue is crucial for accurate financial reporting, as it reflects the subcontractor’s economic activity for the period—even before invoicing or receiving payment. To gain even deeper financial insights, many subcontractors turn to Siteline. Our tool is tailored to help track pay application statuses and amounts owed, empowering subcontractors to make more informed, strategic decisions. Experience the benefits firsthand by scheduling a Siteline demo today.
What is a Request for Information (RFI)?
A Request for Information (RFI) in the construction industry is a formal process through which a party involved in a construction project request details about a document or a process. It acts as a vital communication tool between multiple project parties such as the general contractor, subcontractor, and the design team. This is generally used to resolve information gaps, make decisions or track project changes. The main purpose of an RFI in construction is to eliminate any ambiguity, introduce a control mechanism, avoid unrealistic project expectations and ensure that all participants have a clear understanding of the project. It assists in minimizing project risks and avoids potential disputes related to design issues, cost overruns or schedule delays. It's an essential element in maintaining transparency, effective communication and collaboration within a construction project.
What is a Champion?
A Champion within the construction industry is an individual who plays a critical role in spearheading and facilitating successful implementation of a project, plan, method or innovation. This individual possesses leadership qualities, and is responsible for rallying support, encouraging commitment, and bringing together teams and resources necessary for a project's success. He or she communicates the vision of the project and ensures everyone involved understands and is aligned with the mission. A Champion also works to resolve any issues that may arise, making critical decisions based on their wide range of expertise. They are crucial to the success of construction initiatives, serving as a driving force that encourages progress and ensures high-quality results.
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