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Construction glossary

What is Underbilling?

Underbilling refers to a scenario in the construction industry where the actual costs incurred on a project surpass the billed amount for a specific time period. Often occurring unintentionally due to unexpected cost variations, it results in a deficit situation for the contractor. It is essentially an imbalance where the contractor has delivered more work or materials than they have billed the client for. Underbilling can strain cash flow and disrupt project schedules if not addressed promptly. While this might prove beneficial to the client in the short term, contractors need to ensure that they identify and rectify underbilling to maintain project profitability and financial stability.

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Other construction terms

Days Working Capital

What is Days Working Capital?

Days Working Capital (DWC) in the construction industry is a financial metric used to measure the effectiveness of a company's short term liquidity and operational efficiency. It's calculated by divid...
Notice of Intent to Lien (NOI)

What is a Notice of Intent to Lien (NOI)?

A notice of intent to lien (NOI)—sometimes called an intent notice or notice of non-payment—is a legal document that serves as a final warning from a subcontractor or supplier to the property owner, d...
Performance Obligation

What is a Performance Obligation?

A Performance Obligation in the construction industry refers to a commitment or liability that a contracting party has to perform and fulfill, according to the terms stipulated in a contract. It inclu...

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