What is a Contingency?

A prime contractor, also commonly referred to as a general contractor, is the main contractor responsible for managing an entire construction project. They are in direct contact with the build’s owner/developer and hold primary responsibility for the construction, execution, quality, and completion of the project under the agreed terms and schedules. As such, the prime contractor addresses concerns and resolves issues related to the project, contributing to the effective execution and timely delivery. The prime contractor also manages the procurement of materials, labor, and equipment, ensuring compliance with building codes and regulations.

A critical part of the prime contractor’s job is hiring and managing trade contractors, also known as subcontractors, who specialize in specific construction trades like electrical, plumbing, framing, etc. The prime contractor essentially acts as a hub, contracting out portions of the work to skilled trade contractors while retaining overall control of the project operations.

Prime contractors have a vested interest in working with subcontractors who not only are highly skilled in their respective trades but also have efficient, well-defined operational and financial workflows to ensure reliability and consistency in their performance. Streamlined billing processes are crucial in this regard. When subcontractors can quickly and accurately generate pay applications—complete with the necessary compliance documentation and lien waivers—it allows the prime contractor to bill the project’s owner promptly and get paid faster. Delays in subcontractor billing can significantly impede the prime contractor’s ability to get paid in time, thereby causing delays in payments to other contractors, too. 

This is where a solution like Siteline can ultimately benefit prime contractors by helping their subcontractors streamline billing processes. Siteline accelerates subcontractor billing by automatically generating pay apps per prime contractor specifications, tracking compliance requirements, managing change orders and lien waivers, and providing payment visibility. When subcontractors use Siteline to automate billing, prime contractors receive accurate, compliant pay applications faster, allowing them to bill project owners promptly and get paid quicker as a result.

See how Siteline can accelerate your construction billing cycle and get you paid faster by scheduling a demo today.

An Income Statement, also known as a Profit and Loss Statement, is a vital financial document used in the construction industry, providing a detailed account of a company’s revenue, costs, and expenses over a specified period. It outlines gross profits, operating profits, and net profits after considering all deductions. For construction firms, it not only includes direct incomes and expenses such as labor cost, material cost, subcontracting cost, but also share of overheads like site insurance, equipment rental. It is an essential tool used by construction firms to understand their financial health, profitability, and to make informed strategic decisions for growth and sustainability.

Progress Billing is a method commonly used in the construction industry, where billing for a project is done at different stages as it progresses, rather than asking for full payment upfront or at the completion of the project. This type of billing is beneficial both for constructors and clients. For constructors, it helps maintain the cash flow required for the ongoing expense of materials and labor. For clients, it provides assurance that they are paying for the work only as it is being completed and allows them to budget effectively. Each invoice is usually based on the percentage of work completed, thus it is also known as percentage-of-completion billing method. Proper documentation, like progress reports or photos of the construction site, often accompany these invoices as a proof of progress.