Building Design and Construction Handbook - Merritt - Ventech!

17.6 SECTION SEVENTEEN
17.3 CONTRACTORS’
BUSINESS CONSULTANTS
Construction contractors often have to engage experts from various disciplines to
advise and assist them in conducting their business. In addition to architectural and
engineering consultants, contractors usually consult the following:
Accountant. The accountant selected by a construction company should preferably
be one who has had experience in contracting and construction accounting. This
accountant will know the generally accepted principles of accounting applying to
construction projects, such as costs, actual earnings, and estimated earnings on
uncompleted construction contracts. In addition, the accountant should have an
understanding of management’s role to help formulate the financial picture of the
firm. This role of management involves estimating the probable earnings on uncompleted
jobs and the amounts of reserves that should be provided for by the
accountant for contingencies on jobs that have already been completed but for
which final settlements have not yet been made with all the subcontractors and
suppliers.
Attorney. A construction company may find that it needs more than one attorney
to handle all of its affairs. For example, it will in all likelihood have an attorney
who will be retained for most of the routine matters of corporate business, such as
formation of the corporation, registration by the corporation in other states, routine
contract advice, and legal aid in the general affairs of the business. In addition to
this, however, many construction companies require different attorneys for such
phases of their activities as claims, personal affairs and estate work, real-estate and
tax-shelter matters, and government programs and processing. Many of these functions
are performed by attorneys who specialize in that type of work and can offer
the most up-to-date advice.
Insurance and Bonding. An insurance broker who has a fairly sizable volume of
business is the preferred source of insurance. Such a broker will have the greatest
amount of leverage with insurance companies when questions arise about claims
for losses or about requirements by insurance companies for premium deposits on
policy renewals. Most general insurance brokers with a fairly large clientele should
be able to handle construction company insurance.
When it comes to bonding, however, it may be advisable to deal with a firm
that specializes in general contractors and their bonding problems. Often, general
insurance brokers do not have much experience in this field. While surety companies,
who issue bonds, are generally subsidiaries of insurance companies, bonding
and insurance are guided by entirely different principles. A broker who has many
clients requiring performance and payment bonds is to be preferred for meeting
bonding requirements. Such a broker will be able to offer advice on the bonding
companies best suited for the contractor’s specific business. Also, the broker should
be able to aid the contractor and the contractor’s accountant in preparation of financial
statements so as to show the contractor’s financial position in the most
favorable light for bonding purposes.
Banking. Bank accounts needed for the company’s affairs should preferably be
divided between two or more banking institutions. A banking relationship with
more than one bank could be advantageous at times. For example, it could facilitate