Scheduling as Part of the Project Management Effort - Construction Project Scheduling and Control - page 279

overhead) and subcategorized (common labor, carpenter, concrete, crane, etc.). The
accountant must make sure that actual expenses do not exceed the estimated cost.
The contractor's accounting systemmaintains a list of vendors, suppliers, and sub-
contractors. At any time, the contractor should be able to track any material ordered
from any particular supplier, including the following information:
• Total quantity ordered
• When it was ordered
• Delivery status; if received, when and who signed for it.
• Total cost, how much paid, the balance, and the due date for the balance
• Any problems with the materials and the action taken
The general contractor's accounting system should also include any records of a
subcontractor's monthly payments: how much was requested, approved, authorized,
paid, and retained.
The payroll (for hourly workers) is done regularly (weekly or biweekly). Workers'
hours (regular and overtime) are also posted against specific work items. Accoun-
tants add burden expenses and benefits, and then subtract the appropriate amounts
from the payroll, such as federal and state withholding tax, FICA (Federal Insurance
Contributions Act) fees, FICA medical fees, unemployment insurance contributions,
union dues, medical insurance contributions, and so forth.
The general contractor collects subcontractors' pay requests, incorporates them
into a request for payment , and submits the pay request to the owner. A pay request
goes through the usual steps: verification and approval by the owner, processing, and
issuance of the payment (minus any retainage and/or penalties 12 ). Owners also require
lien releases 13 from the general contractor, subcontractors, and vendors before releas-
ing the payment. Accountants must also keep track of each subcontractor and vendor:
total contract, payments to date, retainage to date, and balance.
Every expense must be approved by an authorized person before it is accepted
into the accounting system. Checks must also be signed by an authorized person.
SCHEDULING AND ACCOUNTING
Scheduling is related to accounting in basically one way. When the project is updated
(statused), information is obtained on new work progress. The cost of this new work
12 In certain locations in the world, contracts allow the contractor to receive an advance payment when
signing the contract. It is usually around 10-20% of the contract value and it is recovered gradually by
deducting the same percentage from progress payments.
13 A lien release is a written agreement by a lien holder (general contractor, subcontractors, vendors) releasing
the debtor (owner) from further obligation. Without a lien release, it is possible that the owner pays his
general contractor but the general contractor does not pay a subcontractor, then the subcontractor places a
mechanics lien against the building (i.e., the owner).