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Construction glossary

What is Lump Sum Billing?

Lump Sum Billing in the construction industry refers to a fixed contract price for the completion of all work required for a specific project. This means that the contractor agrees to complete the whole project at a specific set cost irrespective of the amount of resources and time spent on the project. The contractor bears all the risk and is responsible for any cost overruns. Lump sum billing is commonly used in construction due to its simplicity, as the entire project is billed one time for one set amount.

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Other construction terms

Long-Term Liabilities (or Noncurrent Liabilities)

What are Long-term Liabilities (Noncurrent Liabilities)?

Long-term liabilities, also known as noncurrent liabilities, in the construction industry are obligations that are due more than a year from the current date. They are an important part of a company's...
Retainage

What is Retainage?

Retainage is a common practice in the construction industry where a portion of a subcontractor's payment is withheld until the project reaches substantial completion or a specific milestone. This with...
Zero-Balance Account

What is a Zero-Balance Account?

A zero-balance account (ZBA) is a financial tool commonly used in construction accounting where the account balance is maintained at or near zero. Funds are transferred to the ZBA as needed to cover e...

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