Chapter 9Business Methods

9.1 Introduction

The purpose of this chapter is to discuss selected accounting and business procedures that are commonly utilized in the conduct of a construction business. While the popular conception of construction contracting is visualized as pouring concrete and erecting structural steel, there is far more to a construction business than the contractor's construction operations. The business aspects of operating a construction company are of critical importance to the success and continuance of the enterprise. While it is certainly true that the owners and managers in a construction firm are vitally concerned with the field operations conducted in the performance of the contracts the company has entered, it is also true that the financial, business, and accounting functions which are performed by the company home office are an indispensable component of the successful operation of the construction company.

9.2 Financial Records

The failure of many otherwise well-managed construction companies is frequently caused by the lack of accurate, detailed, and timely information concerning all aspects of the company's financial affairs. Financial records of several different kinds absolutely must be maintained to serve a number of business and management purposes in the company. This, in turn, means that company management must have established a structure for defining the records and documents that must be developed, maintained, and properly stored, ...

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