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Construction glossary

What is Depreciation?

Depreciation in the construction industry refers to the decrease in value of a building or infrastructure over time due to natural wear and tear, damage, ageing, or obsolescence. It's a concept that pertains to accounting and fiscal management within the construction sector. Recognizing depreciation is crucial for construction companies as it can be used for tax benefits and to predict future costs. Depending on the method used, which can be straight-line, declining balance, or sum-of-years digits, the annual depreciation expense can be calculated. Hence, understanding depreciation is key to a construction company's financial planning and strategy.

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Other construction terms

Indirect Costs

What are Indirect Costs?

Indirect costs, in the context of the construction industry, are expenses not directly tied to a specific project, but are essential for the overall operation of a construction firm. They represent th...
Bond Claim

What is a Bond Claim?

A bond claim in the construction industry, also known as a construction bond claim, is a demand for payment by a subcontractor, supplier, or laborer who has not received due compensation for completed...
Pay-if-Paid Clause

What is a Pay-if-Paid Clause?

A Pay-if-Paid Clause is a contractual agreement prevalent in the construction industry. Generally, this clause can be found in subcontracts between the General Contractor(GC) and their subcontractors....

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