Percentage-of-completion (PCM) is a technique of revenue recognition which occurs when a contractor records money based on how much of the project they've completed. Because PCM is an accrual approach, earnings are recognized when the contractor invoices, not when they are paid. Contractors can seek advice from construction CPAs on a variety of PCM approaches for determining how much of a project "count" as completed. Cost-to-cost approaches, physical completion methods, and labor methods are among them. For tax purposes, the IRS mandates contractors with revenue exceeding a specific yearly average or contracts of a certain length to employ this method.
The construction industry faces a persistent labor shortage in early 2025, with an estimated 439,000 additional workers needed. Contractors struggle to find skilled labor, leading to rising wages, project delays, and cost increases. Workforce development and immigration policies will be key to addressing this challenge.
Read MoreLearn effective overhead allocation in construction to improve cost control, financial reporting, and decision-making. Discover best practices, allocation methods, and the role of technology to optimize profitability and streamline operations in this crucial aspect of construction accounting.
Read MoreExplore the critical differences between direct and indirect labor in construction projects, focusing on their impact on project costing, financial analysis, and strategic decision-making. Understand overhead allocation methods and enhance your construction accounting practices for better profitability.
Read MorePresident Trump’s second term will shape the construction industry with policies focused on infrastructure spending, tax reform, and streamlined permitting. Challenges like labor shortages and material costs remain, but initiatives like the Department of Government Efficiency (DOGE) aim to reduce bureaucracy and drive transformative projects.
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