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The Purpose of Business is to Make a Profit
Warren Buffet was a businessman. He never drove a train, wrote an insurance policy, built an office tower, or miniaturized a computer. He strictly analyzed an existing business's ability to make a profit over an extended period and invested an appropriate...
It Takes a Team of Financial Professionals
The unique complex nature of the construction financial transaction cannot be overstated. I make this point repeatedly because my experience working with contractors is they do not see the complexity of the business of contracting the same way I do. The unfortunate...
No Surprises
The instrument rated construction company financial management that we have been discussing these past few weeks is not simply a metaphor. Most of the contractors that failed mid-project when my company was completing construction projects for sureties were surprised...
Use Only the Direct Method
Managing a day-to-day construction business using the three traditional financial statements alone leaves an important financial metric (Cash Flow) difficult to determine accurately on a real time basis. Using the percentage of completion accounting method results in...
The Percentage of Completion Accounting Method
The unique nature of the construction financial transaction (total revenues contracted for rather than collected at the point of sale) demands that the three traditional financial statements we have been discussing these past weeks be prepared using the percentage of...
Flying By Instruments
Piloting a plane by instruments is the practice of navigating and controlling an aircraft using only the cockpit displays, entirely independent of outside visual references like the horizon or landmarks. It requires precise cross-checking, interpretation, and control....
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