What is Underbilling?

Overhead Allocation in the construction industry refers to the process of distributing indirect costs or overheads related to a project, amongst the various direct cost items within the project. This process allows all associated project costs to be accurately reflected, providing a holistic understanding of a project's total expenses. Overhead costs could include equipment rents, electricity, insurance costs, etc. The allocation can be based on certain criteria like the rate of resource consumption. It's a fundamental aspect of financial management, allowing the accurate pricing of projects, assisting in budgeting, and providing key insights that can guide decision-making.

A sworn statement is a legal document used in construction projects that lists all contractors, subcontractors, and suppliers providing labor or materials for a project. When signed, it serves as a sworn declaration that the information provided is complete and accurate, meaning the signer is swearing under oath that no parties other than those listed need to be paid for work on the project. 

Sworn statements include detailed financial information for each party, such as contract amounts, previous payments, current amounts due, and remaining balances. Because these statements are made under oath, providing false information can result in perjury charges.

For subcontractors, sworn statements create transparency in the payment process, ideally to help prevent payment disputes. They’re typically submitted alongside payment applications, especially when requesting final payment. While not required in most states, Michigan and Illinois mandate sworn statements for all construction projects, with Michigan requiring a specific standardized form. Submitting sworn statements proactively—even when not explicitly required—can build trust with general contractors (GCs) and often results in faster payments. However, accuracy is critical; any discrepancies with sworn statements can have the opposite effect—delayed payments and damaged relationships. Check out this blog post for more tips on managing sworn statements.

Siteline can simplify the sworn statement process through integrations with popular construction accounting systems like Sage 300 CRE, Sage 100, Sage Intacct, Spectrum, and Vista. These integrations automatically pull accounts payable (A/P) information to complete sworn statements and subcontractor affidavits accurately, preventing costly errors and delays. See for yourself—book a no-obligation demo of Siteline today.

A Schedule of Values (SOV) is a detailed breakdown of a construction contract that itemizes the total contract amount into specific work categories, phases, or deliverables. It shows the dollar value assigned to each component of work that’ll be completed during a construction project. As such, the SOV is a critical component of successful project and cash flow management. It also lays the groundwork for progress billing and payment applications (like AIA® G702/G703® forms).

Here’s how it works: 

• Contractors create initial SOVs that allocate contract value across work phases.
• They maintain the SOVs to align with actual work schedules and ensure billing requests match project progress.
• SOVs get updated when changes occur on the job, altering the original scope and budget.

As you can imagine, managing multiple SOVs across projects while tracking actual costs against line items becomes complex and time-consuming.

Siteline streamlines this entire process by integrating with major construction ERPs and accounting software. Subs import project data from their ERP into Siteline, compile and send pay apps directly in the system (accounting for any change orders), and then rest easy knowing that Siteline automatically syncs approved invoices back to the ERP. 

The result? Faster billing cycles and quicker payments. Want to see how it works? Book some time with us.