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Winter 2015 – Quarterly Construction Newsletter

In this edition:

Simpler accounting option now available for leasing entities

FASB’s Accounting Standards Update (ASU) No. 2014-07, Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements, offers private companies a simpler way to account for certain related leasing entities. Construction businesses that adopt the alternative can avoid the potentially costly variable interest entity (VIE) analysis associated with these entities and need not consolidate these entities on their financial statements. This article explains why this can be advantageous for contractors. A private company may opt out of the VIE rules with respect to a leasing entity, but, as a sidebar explains, this isn’t right for every contractor. Read more

Succession planning – Will your buy-sell agreement work when you need it?

To ensure a smooth ownership and management transition from one generation to the next, all closely held construction companies should have a succession plan. And a key component of that plan is a buy-sell agreement, which provides for the orderly transfer of ownership and control and creates a market for otherwise unmarketable ownership interests. However, as this article explains, a buy-sell agreement should have a carefully designed — and current — valuation provision, which sets the purchase price for a departing owner’s shares. Read more

Impressing your surety in an iffy economy

With the ups and downs in today’s economy, it can be difficult for a construction business to demonstrate that it deserves a solid “thumbs up” from its surety that its bonding capacity is all that it should be. This article describes the financial indicators that particularly interest sureties and what a contractor needs to do to improve them. Read more

Contractor’s Toolbox – Use JPM to track productivity during jobs

Traditional measures of productivity are applied after the fact, so they do little to help contractors spot issues during a job — while there’s still time to do something about it. This article looks at one remedy: ASTM International’s Job Productivity Measurement (JPM) standard. Adopted in 2010, the standard enables contractors to measure productivity throughout a job and serves as an “early warning system” for potential productivity problems down the road. Read more