Contracting & Construction

Two sides of the same wall

A contracting company lives on two mirrored promises. It promises an owner a building for an agreed price and bills them monthly for the part that is finished; it promises subcontractors payment for their slice of the same work, and they bill it in exactly the same shape. Nama is built around that mirror, document for document: a contracting offer against a subcontractor offer, a project contract against a subcontract, project execution against subcontractor execution, and a project extract against a subcontractor extract. One side earns, the other owes, and both use the same grids and the same arithmetic.

One deduction exists only on the subcontractor side, and it is the one every contractor recognises: material sold to a subcontractor out of your own store is charged back to him and appears as a deduction on his next extract.

Contracts book nothing. Extracts book everything

This single rule explains more about running a contracting business properly than any feature list. A project and a project contract are master files. Signing a contract worth millions creates no journal entry, moves no stock and raises no receivable.

Money reaches the ledger when an extract is issued. The extract is the certified payment application: it states, term by term, how much work is being billed this time, prices it at the contract’s rates, adds VAT, then subtracts everything the contract says must be withheld — retention, recovery of the advance the owner already paid, penalties — and arrives at a net payable. It is what you send the owner, it is what goes to the tax authority as an e-invoice, and on the owner side it is the only document with an accounting effect at all.

The consequence is a discipline: what has been certified and what has been spent are two different figures at every moment of the job, and both are visible.

Estimating, and pricing that is not linear

Before any of that, there is the bid. Assays and term analysis cards build a rate from its components — material, labour, plant, subcontract — so the tendered price has a structure behind it rather than a margin added to a guess. Contract templates carry the standard terms and conditions a company always bids on, so the fifteenth tender is not typed from scratch.

Contracting price lists handle something ordinary price lists cannot: a rate that changes with dimension. A marble slab at one metre square is not simply a quarter of the price of two metres square, and a unit priced between 100 and 150 cm may be priced differently from 150 to 200 cm. Rates by length, area and volume, with their own minimums, are how contracting is actually quoted here.

Where the cost actually comes from

Cost arrives from five directions, and all of it lands on the project rather than in a general expense account:

• Materials issued to site from your own stores, with returns, charged to a term or to a specific analytical item beneath it.
• Subcontractor claims, certified through their own extract chain.
• Daily labour, recorded in the site labour book, and the daily engineering diary alongside it.
• Plant and equipment, allocated to projects and their cost distributed across them.
• Miscellaneous spend — the transport, the permits, the things no store carries — through its own request, order and invoice chain.

Against that sit two budgets: an estimated budget from the bid, and an executive budget for how the work is actually being run. Budget execution compares them, so a variance is a figure while the job is running rather than a finding at the final account.

Fines are recorded on either side — against you for the owner’s delay claims, against a subcontractor for his — linked to the project or budget item they concern, and deducted through the extracts.

Quality that has to be signed before it is paid

Work is often not certifiable until it has been inspected, so the inspection belongs in the same system as the payment. Nama covers inspection and test plans with their registers, pre- and post-concrete inspections, material receipt inspection, activity inspection requests, site checklists for finishing and for digging and backfilling, and pressure and flushing tests for piping and fire systems.

If you also develop what you build

A contractor working on someone else’s land needs cost per term: what did the blockwork cost, are we inside the rate we tendered. A developer selling units needs cost per flat — and nobody ever spends money on flat 12. They spend it on the tower’s blockwork, the tower’s lifts, the tower’s scaffolding.

Nama bridges the two: project cost pushes down onto real-estate units, so when a unit is handed over and invoiced, its cost of sale is its own share of everything the tower consumed. For a group that builds and sells, that bridge is the whole accounting problem, and it is built rather than improvised.

The owner cycle, the subcontractor cycle, extracts, budgets, cost and the quality suite are documented in the contracting section.