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Labor Burden
What is Labor Burden?
Labor burden in the construction industry refers to the additional costs borne by a construction firm beyond direct wages paid to employees. It encapsulates all indirect expenses associated with employing a workforce such as benefits, workers compensation, insurance, PTO, retirement pensions, uniforms, training costs, and equipment among other employment related costs. An accurate understanding of labor burden is crucial for construction firms because it directly impacts bidding and project pricing efficiency. When effectively managed, it can improve a firm's profitability and long-term financial stability. Hence, Labor Burden is a key financial metric in the construction industry.
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Other construction terms
What is Breaking Ground?
Breaking ground refers to the official start of construction on a project, typically marked by the initial digging into the ground. It’s the first step toward site preparation, which involves various tasks, like soil testing, land clearing, excavation, leveling, etc. The term originates from the literal act of "breaking" or disturbing the ground to begin foundation work.
Breaking ground marks the transition from pre-construction activities (permitting and design finalization) to actual building work. This is when project timelines become essential to track, material deliveries need coordination, and subcontractors start mobilizing their teams and equipment to the job site.
Once its time to start building, it’s time to start billing. Siteline helps subcontractors streamline their pay app and lien waiver processes, eliminating bottlenecks that can hold up payments for faster payments. Learn more about Siteline.
What is a G703?
A G703 is a continuation sheet used in the construction industry. It's part of the AIA (American Institute of Architects) document set for contract documents. The G703 form includes a schedule of values listing portions of the work, scheduled values, work completed, materials stored, total completed and stored, percentage of work completed, balance to finish, and the amount of change orders. Hence, it is primarily used for breaking down the contract sum into portions of work in accordance with a schedule of values prepared by the contractor. It provides a running total of completed work and can be updated as work progresses.
What is a Performance Bond?
A Performance Bond is a type of surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. In the construction industry, a Performance Bond is often required to protect the client if the contractor fails to complete the contract or does not meet the agreed standards or time frame in performing the project. It is essentially a safeguard tool that ensures the project owner will not incur financial loss due to the contractor's inability to fulfill the contract. This bond provides assurance that the contractor has the necessary resources and competencies to execute the project according to the stipulated terms.
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