AGÕæÈËÓÎÏ·

Direct labor in the construction industry refers to the workforce directly involved in the construction, alteration or development of a project. This primarily includes on-site workers like carpenters, bricklayers, electricians, plumbers, concrete finishers, steel workers and others who are hands-on in assembling, fabricating, and finishing physical components of a constructed entity. These are the personnel who directly contribute to the construction process by physically constructing or installing components of the project. The expenses incurred for this labor force, including their wages, benefits, and any associated costs, are considered as direct labor costs. It is crucial as the effectiveness and efficiency of the direct labor can greatly impact the project's quality, cost, and timeline. Therefore, project managers in the construction industry often focus a great deal on managing and optimizing direct labor.

Progress Billing is a method commonly used in the construction industry, where billing for a project is done at different stages as it progresses, rather than asking for full payment upfront or at the completion of the project. This type of billing is beneficial both for constructors and clients. For constructors, it helps maintain the cash flow required for the ongoing expense of materials and labor. For clients, it provides assurance that they are paying for the work only as it is being completed and allows them to budget effectively. Each invoice is usually based on the percentage of work completed, thus it is also known as percentage-of-completion billing method. Proper documentation, like progress reports or photos of the construction site, often accompany these invoices as a proof of progress.

An equity turnover ratio is a financial metric that is highly relevant within the construction industry. Essentially, it measures how efficiently a construction company leverages its equity to generate revenue. The ratio is calculated by dividing the company’s annual sales by average shareholder equity. The resulting number indicates how many times the company has turned its equity into revenue during a given year. A high equity turnover ratio is typically a good sign, indicating a company’s efficient use of its shareholder’s equity. It reflects the company's ability to manage its operations and utilize its assets effectively. This ratio is particularly important in the construction industry as it involves high capital expenditure and risk. Underinvestment or overinvestment can negatively impact profitability. Therefore, this ratio can be a key determinant of a construction company's financial health and operational efficiency.