Construction & Specialty Trades
Common pressures
Cash timing and job cost.
Work is paid through draws, progress billings and retainage, often well after labor and materials have been paid for. One underestimated job can absorb the margin from several good ones. In a growing contractor, the harder question is often about management rather than survival: who owns the estimate, the schedule and the change orders when the owner cannot.
| Industry | How the work is delivered |
|---|---|
| General contracting | Bid projects with progress billing and retainage |
| Specialty trade subcontractors (framing, drywall, insulation, painting, flooring and similar) | Project work, some service |
| HVAC/R | Service and repair, replacement installs, commercial projects |
| Plumbing | Service and repair, projects |
| Electrical | Projects and service |
| Roofing | Replacement projects and repair, including storm work paid through insurance claims |
| Excavation and site work | Bid projects with retainage |
In JPMorgan Chase Institute data covering 2015, the median construction business held about 20 days of cash on hand, against 27 days for small businesses overall.Source: JPMorgan Chase Institute, Cash Is King: Flows, Balances, and Buffer Days, 2016