Tariffs Spark Fears of Rising Construction Costs: Could Investment in Technology Be the Answer?
Oct 15,2018
As U.S. trade policy decisions continue to dominate headlines, the uncertain future of high-demand import prices has business leaders and lawmakers anxious. Earlier this year, President Trump announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports that took effect on March 23. While the European Union (EU), Canada, and Mexico were granted a temporary reprieve, Trump declined to extend their exemption. China was the first to implement retaliatory tariffs on U.S. exports, such as soybeans, planes, and cars. Since then, the U.S. has been in talks with China to de-escalate the situation, but no permanent solution has been reached. After their exemption expired, Mexico announced $3 billion in tariffs against U.S. exports, including: pork, apples, potatoes, and bourbon. Canada and the EU both issued retaliatory tariffs as well. While the stated objective of this trade policy is to “level the playing field” for American manufacturers—and many trade...
Construction Material Prices Show Largest Monthly Increase in a Decade
Aug 20,2018
Construction Survey Respondents Report Material Prices as a Chief Concern  Construction material prices, which have been on a steady climb in 2018, reached a dubious milestone in May, with the largest monthly increase in construction material costs in 10 years. Material costs continued to increase in June by another 0.8%. According the Bureau of Labor Statistics, costs in June were 9.6%, higher than the same period one year ago. Contributing factors include increasing inflationary pressure resulting from rising interest rates, and escalating tariffs. The Fed raised interest rates in June 2018 and signaled two more possible rate hikes in the remainder of the year. This, combined with potential retaliatory measures by some trading partners, could pinch contractors further in the months to come. According to officials from the Association of General Contractors (AGC), the threat of new tariffs has already led to dramatic increases in many construction materials. “Prices jumped...
2018 Georgia Construction Survey
Mar 15,2018
We are excited to release our second annual survey of Georgia’s construction industry. We seek your perspective on issues important to you, such as job size, financing, threats and growth opportunities. We’re also interested in learning about the impact of the Tax Cuts and Jobs Act on your business, and your views on skilled workforce challenges— the #1 issue in last year’s survey. The survey takes approximately 8 minutes to complete.Click here to complete the Construction SurveyEveryone who completes the survey will receive a copy of the survey results and analysis as soon as they are available.Invite Your PeersWe greatly appreciate your feedback and your time. Please invite your peers to complete the survey by sharing this link. All participants will receive the survey results and analysis.Click here to complete the Construction SurveyThe survey will be open through Tuesday, April 3 at 6 p.m.Please contact Smith & Howard’s Marketing Department if you have any questions as...
Construction Success Story: Contractor Mulls Commercial Crime Insurance
Jun 23,2017
A contractor in a busy urban area was worried. A local electrical subcontractor, with whom he’d worked, had been victimized by fraud. Over a period of years, two employees had been stealing inventory, tools and equipment. The loss had amounted to more than $100,000.The contractor started wondering how he might manage the risk of fraud. His insurance rep had mentioned once that there were policies available, but the contractor was concerned about the cost. So he talked to his CPA about whether commercial crime insurance was a worthy investment.Factors to considerHis CPA told him it depends on a number of factors and suggested some things to consider. First, the contractor should look closely at his inventory of materials, tools and equipment. What steps does he currently take to track and secure it?Also, does he keep quantities of cash or securities in his office? If so, are these items routinely transported...
How Contractors Can Profit from Idle Equipment
Jun 23,2017
If you have construction equipment that’s sitting idle in your yard, it’s costing you money to store, maintain and insure. Although a certain amount of downtime is inevitable when project workflow varies, you’re wise to look for ways you can put idle assets to profitable use.If you’re confident you won’t need a piece of equipment again, you can of course sell it. But if you expect the stretch of idleness to be temporary, you may be able to rent out the asset to another contractor in the interim. Either way, some new tools and services are making it easier to manage the process.Paths to equipment salesThe market for used construction equipment has been pretty robust — especially since the Environmental Protection Agency’s Tier 4 emission standards have driven up the cost of new machinery. A recent survey of Independent Equipment Dealers Association members shows increased demand for pre-Tier 4 construction equipment,...
Creating a Cash Flow Forecast
Jun 23,2017
They say you can’t predict the future. Technically, that’s true — no one can say, within every minute detail, what will happen tomorrow. But, when it comes to their cash flow, contractors have to at least try. Knowing what the future holds for your cash flow is, in many ways, the key to your success. If you know you’re headed for a position of strength, you can be more aggressive in your bids. Tough times ahead? Then it might be best to scale back. Let’s look at some ways to prognosticate about those dollars. Evaluate your inflows The first step to realistic forecasting is to approximate incoming cash flows. Start with projected cash flows for planned, in-progress or completed jobs for which you haven’t billed or collected fully. This task relies heavily on billing schedules. At the beginning of each project, develop a well-thought-out, front-loaded billing schedule. Doing so will...
Tips for Managing Project Scope
Apr 08,2017
Contractors by their nature and occupation have a need to be in control. Nearly every project includes a struggle to maintain control of costs, safety and quality.To put it a different way, what you’re trying to manage on every job is its scope. When you can keep the project confined to its contractual parameters, the job will likely turn out fine. Unfortunately, the scope often has a funny way of expanding its reach, pushing you aside and taking over a job. The results usually aren’t very positive.3 parts to the storyEvery contractor needs to stay on top of his or her scope management procedures to prevent the job from getting out of hand. These are active and ongoing steps to monitor a project and to keep the job within reasonable limits. They should ensure that, if the scope does significantly expand, you get paid for it. Think of scope management...
What Are Public-Private Partnerships?
Apr 08,2017
The United States is facing consequences from decades of deferred maintenance and underinvestment in infrastructure. At the same time, available public fund levels for such projects are low and resistance to increased taxation is high.One approach government agencies are exploring to help meet the needs for new infrastructure projects is developing public-private partnerships (P3s). These arrangements could provide profitable opportunities for contractors in the near future, so it’s important to know how they work.The concept, definedUnder the P3 model, a public entity (federal, state or local) engages a private partner, which in turn hires, supervises and pays the contractor. The private partner may participate in the design, financing, operation and maintenance of the project, as well as in the construction. The specific role of the private partner varies considerably from one project to another. Ideally, everyone’s role is clearly spelled out in the contract.The types of projects that have been...
Working Smarter: 3 Hot Types of Apps for the Construction Industry
Apr 08,2017
In the construction industry, most of the day-to-day action takes place in the field. So it’s only natural that contractors are eager to find mobile apps for smartphones and tablets that can help them work better. In fact, Smith & Howard's recent survey of Georgia construction companies shows that 91% of respondents are using iPads or tablets.  Developers have responded with a wide range of products designed to suit a variety of job functions. Of course, that doesn’t mean you should rush out and download everything under the sun.Big picture vs. smallFor decades, traditional software companies have worked hard to develop comprehensive, integrated packages for contractors in areas such as project management, financial analysis and reporting, and fleet management. Many of these products have become useful front-office tools; however, they don’t always adapt well to a mobile platform.For this reason, some of the most useful construction apps focus on specific...
Construction Success Story: Cost-Plus vs. Fixed-Price Contracts
Apr 08,2017
After 10 years in the field, a remodeling contractor had worked on quite a few jobs. Some had been set up as fixed-price contracts and others had been performed on a cost-plus basis. Looking to improve his company’s financial performance, he asked his CPA to review the pros and cons of both formats and to recommend the best approach. “Both types of contracts can work if you have a reasonable client with clear and realistic expectations,” she began. They both agreed, however, that this ideal situation wasn’t always the case. Further info required Under a fixed-price arrangement, the contractor establishes a set price for the job regardless of the actual time and materials used. This type of contract requires a detailed and accurate estimate. The CPA advised the contractor to: Assess his confidence in his own estimates, Examine the calculations he was using to forecast job costs, and Arrive at...

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