Construction Accounting and Financial Management,
BB BB BB BB
, CONTENTS
New to the Fourth Edition
BB BB BB BB 1
Chapter 1: Construction Financial Management
BB BB BB BB 2
Chapter 2: Construction Accounting Systems
BB BB BB BB 4
Chapter 3: Accounting Transactions
BB BB BB 7
Chapter 4: More Construction Accounting
BB BB BB BB 23
Chapter 5: Depreciation
BB BB 34
Chapter 6: Analysis of Financial Statements
BB BB BB BB BB 50
Chapter 7: Managing Costs
BB BB BB 58
Chapter 8: Determining Labor Burden
BB BB BB BB 62
Chapter 9: Managing General Overhead Costs
BB BB BB BB BB 65
Chapter 10: Setting Profit Margins for Bidding
BB BB BB BB BB BB 67
Chapter 11: Profit Center Analysis
BB BB BB BB 70
Chapter 12: Cash Flows For Construction Projects
BB BB BB BB BB BB 75
Chapter 13: Projecting Income Taxes
BB BB BB BB 87
Chapter 14: Cash Flows for a Construction Company
BB BB BB BB BB BB BB 91
Chapter 15: Time Value of Money
BB BB BB BB BB 93
Chapter 16: Financing a Company’s Financial Needs
BB BB BB BB BB BB 99
Chapter 17: Making Financial Decisions
BB BB BB BB 111
Chapter 18: Income Taxes and Financial Decisions
BB BB BB BB BB BB 130
Construction Accounting and Financial Management, BB BB BB BB
, iii
Construction Accounting and Financial Management,
BB BB BB BB
, New to the Fourth Edition BB BB BB BB
The major changes to the fourth edition include the following
BB BB BB BB BB BB BB BB BB
• The business failure rate for construction companies in Chapter 1 have
BB BB BB BB BB BB BB BB BB BB
beenupdated.
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• Sections on cost segregation and bonus depreciation have been added to Chapter 5.
BB BB BB BB BB BB BB BB BB BB BB BB
• The discussion of typical median ratios in Chapter 6 has been updated.
BB BB BB BB BB BB BB BB BB BB BB
• A section on the monitoring and controlling process has been added to Chapter 7.
BB BB BB BB BB BB BB BB BB BB BB BB BB
• A section on managing design-build costs has been added to Chapter 7.
BB BB BB BB BB BB BB BB BB BB BB
• The wages, social security, and Medicare costs were updated in Chapters 8, 9,
BB BB BB BB BB BB BB BB BB BB BB BB
and 14.
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• A weekly cash flow problem has been added to Chapter 12.
BB BB BB BB BB BB BB BB BB BB
• The income tax regulations in Chapter 13 have been updated to
BB BB BB BB BB BB BB BB BB BB
incorporateprovisions of The Tax Cuts and Jobs Act passed in December
BB B BB BB BB BB BB BB BB BB BB BB
2017.
BB
• The project cash flows used to develop an annual cash flow for a construction
BB BB BB BB BB BB BB BB BB BB BB BB BB
company have been expanded to cover the entire project (including work done
BB BB BB BB BB BB BB BB BB BB BB BB
inthe prior year) and the calculation of the underbillings/overbillings has been
BB B BB BB BB BB BB BB BB BB BB BB
included in Chapter 14.
BB BB BB BB
• The effects of taxes on decision has been updated in Chapter 18 to incorporate
BB BB BB BB BB BB BB BB BB BB BB BB BB
theTax Cuts and Jobs Act.
BB B BB BB BB BB
The Instructor’s Manual includes a list of learning objectives, instructional hints,
BB BB BB BB BB BB BB BB BB BB
suggested activities, and resources for each chapter. Files for the figures and tables in
BB BB BB BB BB BB BB BB BB BB BB BB BB BB
the textbook are found on the instructor’s website. It is my hope that these resources
BB BB BB BB BB BB BB BB BB BB BB BB BB BB BB
will make it easier for course instructors to teach the material in a meaningful manner.
BB BB BB BB BB BB BB BB BB BB BB BB BB BB BB
Because the courses that use this textbook are quite diverse, it is impossible to organize
BB BB BB BB BB BB BB BB BB BB BB BB BB BB BB
the chapters into one best order. Each instructor should consider his or her individual
BB BB BB BB BB BB BB BB BB BB BB BB BB BB
program and determine which chapters need to be taught and in what order.
BB BB BB BB BB BB BB BB BB BB BB BB BB
Best wishes, BB
Steven J. Peterson, MBA, PE
BB BB BB BB
BB BB BB BB
, CONTENTS
New to the Fourth Edition
BB BB BB BB 1
Chapter 1: Construction Financial Management
BB BB BB BB 2
Chapter 2: Construction Accounting Systems
BB BB BB BB 4
Chapter 3: Accounting Transactions
BB BB BB 7
Chapter 4: More Construction Accounting
BB BB BB BB 23
Chapter 5: Depreciation
BB BB 34
Chapter 6: Analysis of Financial Statements
BB BB BB BB BB 50
Chapter 7: Managing Costs
BB BB BB 58
Chapter 8: Determining Labor Burden
BB BB BB BB 62
Chapter 9: Managing General Overhead Costs
BB BB BB BB BB 65
Chapter 10: Setting Profit Margins for Bidding
BB BB BB BB BB BB 67
Chapter 11: Profit Center Analysis
BB BB BB BB 70
Chapter 12: Cash Flows For Construction Projects
BB BB BB BB BB BB 75
Chapter 13: Projecting Income Taxes
BB BB BB BB 87
Chapter 14: Cash Flows for a Construction Company
BB BB BB BB BB BB BB 91
Chapter 15: Time Value of Money
BB BB BB BB BB 93
Chapter 16: Financing a Company’s Financial Needs
BB BB BB BB BB BB 99
Chapter 17: Making Financial Decisions
BB BB BB BB 111
Chapter 18: Income Taxes and Financial Decisions
BB BB BB BB BB BB 130
Construction Accounting and Financial Management, BB BB BB BB
, iii
Construction Accounting and Financial Management,
BB BB BB BB
, New to the Fourth Edition BB BB BB BB
The major changes to the fourth edition include the following
BB BB BB BB BB BB BB BB BB
• The business failure rate for construction companies in Chapter 1 have
BB BB BB BB BB BB BB BB BB BB
beenupdated.
BB B
• Sections on cost segregation and bonus depreciation have been added to Chapter 5.
BB BB BB BB BB BB BB BB BB BB BB BB
• The discussion of typical median ratios in Chapter 6 has been updated.
BB BB BB BB BB BB BB BB BB BB BB
• A section on the monitoring and controlling process has been added to Chapter 7.
BB BB BB BB BB BB BB BB BB BB BB BB BB
• A section on managing design-build costs has been added to Chapter 7.
BB BB BB BB BB BB BB BB BB BB BB
• The wages, social security, and Medicare costs were updated in Chapters 8, 9,
BB BB BB BB BB BB BB BB BB BB BB BB
and 14.
B BB
• A weekly cash flow problem has been added to Chapter 12.
BB BB BB BB BB BB BB BB BB BB
• The income tax regulations in Chapter 13 have been updated to
BB BB BB BB BB BB BB BB BB BB
incorporateprovisions of The Tax Cuts and Jobs Act passed in December
BB B BB BB BB BB BB BB BB BB BB BB
2017.
BB
• The project cash flows used to develop an annual cash flow for a construction
BB BB BB BB BB BB BB BB BB BB BB BB BB
company have been expanded to cover the entire project (including work done
BB BB BB BB BB BB BB BB BB BB BB BB
inthe prior year) and the calculation of the underbillings/overbillings has been
BB B BB BB BB BB BB BB BB BB BB BB
included in Chapter 14.
BB BB BB BB
• The effects of taxes on decision has been updated in Chapter 18 to incorporate
BB BB BB BB BB BB BB BB BB BB BB BB BB
theTax Cuts and Jobs Act.
BB B BB BB BB BB
The Instructor’s Manual includes a list of learning objectives, instructional hints,
BB BB BB BB BB BB BB BB BB BB
suggested activities, and resources for each chapter. Files for the figures and tables in
BB BB BB BB BB BB BB BB BB BB BB BB BB BB
the textbook are found on the instructor’s website. It is my hope that these resources
BB BB BB BB BB BB BB BB BB BB BB BB BB BB BB
will make it easier for course instructors to teach the material in a meaningful manner.
BB BB BB BB BB BB BB BB BB BB BB BB BB BB BB
Because the courses that use this textbook are quite diverse, it is impossible to organize
BB BB BB BB BB BB BB BB BB BB BB BB BB BB BB
the chapters into one best order. Each instructor should consider his or her individual
BB BB BB BB BB BB BB BB BB BB BB BB BB BB
program and determine which chapters need to be taught and in what order.
BB BB BB BB BB BB BB BB BB BB BB BB BB
Best wishes, BB
Steven J. Peterson, MBA, PE
BB BB BB BB
