What is a Project Budget?

In construction, an allowance is a predetermined dollar amount included in a contract to cover materials, fixtures, or finishes that haven’t yet been selected. Allowances are typically used for flooring, lighting fixtures, plumbing fixtures, appliances, or other finish materials (things that contribute to the project’s aesthetic) where the owner may want flexibility to make selections as the project evolves.

Here’s how allowances work: When contractors bid on a project, they’ll include specific allowance amounts (e.g., $5,000 flooring allowance). Once construction begins and the owner chooses actual materials, the costs are reconciled against the allowance. If the materials cost less, they receive a credit. If more, the owner pays the difference via a change order.

Siteline can help you track and manage those change orders, ensuring you get paid for that difference. Learn more about how Siteline streamlines change order management here.

A Notice of Commencement (NOI) is a legal document filed by general contractors (GCs) to formally declare the start of a construction project. In addition to establishing an official record of when construction began, it also provides essential information about the project—property details, project scope, contact information for key project stakeholders, etc. In some states, it may be referred to as a Notice of Project Commencement, an Affidavit of Commencement, or a Notice of Contract. 

For subcontractors, NOCs are important because they determine when you need to file paperwork to protect your lien (and thereby, payment) rights. Once the owner or GC files an NOC, it often changes the deadlines for when you must submit preliminary notices and mechanics’ liens. These documents contain vital project information, including:

• legal property descriptions,
• owner details,
• GC information, and
• surety data.

In most states where NOCs are required, they must be posted at the job site and recorded with the county clerk’s office. Subcontractors should be aware that failing to respond properly to an NOC could result in losing their right ot file a lien if a payment issue arises.

Staying informed about documentation like NOCs is crucial for securing payment on construction projects. For more detailed information on how to protect your lien when working on projects with an NOC, visit this blog post for the complete guide and best practices. Subscribe to Siteline’s newsletter for regular updates on getting paid on time and protecting your bottom line.

General and Administrative Costs (G&A) in the construction industry refer to expenses associated with day-to-day operations that are not directly tied to a specific project. These are necessary costs for a business to operate but are not easily assignable to a particular construction job. They typically include office rent, utilities, office supplies, insurance, legal fees, accounting services, salaries of non-project related staff, and other management expenses. It's important for construction businesses to carefully manage G&A costs as they can significantly impact the profitability if not monitored and controlled carefully. These costs are usually spread proportionately across various projects, based on some measure like total project labor costs. A high amount might indicate inefficiency, while a very low amount could suggest underinvestment.