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Construction glossary
Construction Glossary •

Time-and-Material billing

What is Time-and-Material Billing?

Time-and-material billing is a method used in the construction industry where a client is charged based on the actual cost of labor and materials for a project, along with an added markup for the contractor's profit. This approach promotes transparency as customers directly pay for the time spent on the project and materials used. The advantage of this method is the flexibility it provides - if a project scope is unclear or likely to change, it can be more efficient than a fixed-price model. However, it also contains a risk for the client, with a chance that costs could increase if the construction takes longer or requires more resources than estimated. It requires meticulous tracking of working hours, materials, and equipment used. The client also needs to keep an eye on the project to avoid unnecessary costs.

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Other construction terms

Cloud-Based Software

What is Cloud-Based Software?

Cloud-Based Software, in the context of the construction industry, refers to software applications that are hosted on remote servers and accessible via the internet. Instead of being installed directly on your local hardware or computer, the software applications and data are stored and managed on servers in a remote data center. This means you can access them from any device, at any time, provided you have an internet connection. The use of cloud-based software in construction allows real-time sharing and collaboration on projects, efficient storage of large design files, automated scheduling, accurate cost estimation and improved resource management, thus enhancing efficiency and productivity.

What is a Notice of Commencement (NOC)?

What is a Notice of Commencement (NOC)?

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.

Deduction

What is a Deduction?

A deduction in the construction industry refers to a reduction or subtraction of expenses or costs incurred during a construction project. Typical deductions may include costs of materials, labor, damage repairs or maintenance, and professional fees such as architect or engineer services. It is essential for construction businesses to keep track of these expenses as they can be beneficially used for tax deduction purposes. The aim is to lower the overall taxable income, resulting in a reduced tax bill. However, it is crucial to ensure that all deductions comply with laws and regulations to prevent any potential legal implications.

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