What are Liquidated Damages?

A general contractor (GC), also commonly referred to as a prime 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 GC addresses concerns and resolves issues related to the project, contributing to the effective execution and timely delivery. The GC also manages the procurement of materials, labor, and equipment, ensuring compliance with building codes and regulations.

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

GCs 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 GC to bill the project’s owner promptly and get paid faster. Delays in subcontractor billing can significantly impede the GC’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 GCs by helping their subcontractors streamline billing processes. Siteline accelerates subcontractor billing by automatically generating pay apps per GC specifications, tracking compliance requirements, managing change orders and lien waivers, and providing payment visibility. When subcontractors use Siteline to automate billing, GCs 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.

Current Liabilities are financial obligations or debts that a construction company has to settle within a short-term period, typically within a year. These usually include suppliers' payments for building materials, salaries and wages for construction workers, short-term loans for immediate project needs, interest payments on construction loans and taxes. These might also consist of project-related accrued expenses, or money that the company owes but has not been billed for yet, such as utilities. It's critical for businesses running construction projects to properly manage their Current Liabilities to ensure financial stability and the smooth completion of projects. The ability to meet these short-term financial obligations is a key indicator of the financial health of a construction company.

Cost Plus Billing in the construction industry refers to a method where the customer agrees to cover the actual costs, expenses and other direct costs of the construction project plus an additional sum for contractor’s overhead and profit. These typically include costs of materials, labor, and subcontractor charges. The agreement clearly establishes and defines what is constituted as cost, the overhead percentage, and the profit percentage, reducing the risk of any surprise costs. Essentially, the 'Cost' represents the direct costs of the construction, while the 'Plus' is the contractor's fee and is usually agreed upon as a fixed percentage of the total costs or as a target price with a shared savings clause.