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Request for Change Order (RFC)
What is a Request for Change Order (RFC)?
A request for change order (RFC) is a formal document that subcontractors submit to general contractors when they encounter work that falls outside their original contract scope. Unlike the actual change order, which is the approved contract modification, an RFC is the preliminary request that kicks off the approval process. These requests typically include details about the additional work, justification for why it's necessary, cost estimates, and timeline impacts.
RFCs are critical for protecting subcontractors from performing unbillable work, but they need to be submitted quickly when field conditions change. The challenge is that field teams often discover the need for additional work while actively working on-site, but the documentation and approval process typically happens back in the office. This disconnect can create delays that either hold up project progress or pressure subcontractors to proceed with work before getting proper approval.
Siteline streamlines this process by bridging the gap between field and back office teams, making it easier to document scope changes as they happen and convert them into well-organized requests. See how Siteline can improve your RFC process—request a personalized demo here.
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Other construction terms
What is a Partial Lien Waiver?
A Partial Lien Waiver, in the construction industry, refers to a legal document drafted to provide assurance to a payer that a contractor, subcontractor or materials supplier has received specified payments and waives its right to place a lien on the construction project to the extent of received payments. This document, typically used to maintain a clear title, only relates to the amount that has been paid up to a certain point. Subsequent payments would need additional waivers. It is advised to closely monitor Partial Lien Waivers as they help in avoiding disputes about the amount due, ensuring smoother construction operation.
What is Equity?
Equity in the construction industry refers to the financial investment made by the stakeholders in a construction project. It's essentially the difference between the overall project cost and the amount borrowed to finance it. The capital is often fund supplied by owners, investors, or shareholders. These entities get a return on their investment either through project profits, or an increase in the value of the project, thus, equity provides them with ownership rights. Interestingly, a high equity stake in projects usually indicates low leverage and low financial risk. The construction industry relies heavily on equity, particularly during large-scale projects as these require substantial financial backing. Consequently, a contractor with a higher level of equity is often regarded as more stable and trustworthy.
What is a Chart of Accounts?
A Chart of Accounts (COA) in the construction industry is essentially a financial organizational tool that provides a complete listing of every account in an accounting system. These accounts are typically used to categorize financial transactions that a business has to deal with to conduct its everyday operations. In construction, the COA may include accounts such as materials, labor costs, subcontractor fees, overhead expenses, equipment costs, and liabilities. Different project types will often require different charts of accounts. Furthermore, the COA assists in organizing the company's finances and ensuring accurate financial reporting, it's also important for identifying the total costs of a construction job, tracking profit margins, and analyzing expenses. It's a critical tool in managing a construction company's finances.
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