Management in Engineering Book from C.H.I.P.S.

Financial Management and Accounting Fundamentals for Construction
by Daniel W. Halpin

Financial Management and Accounting Fundamentals for Construction is a compact summary of the basic financial skills that a construction professional must have to be successful in the management of a construction company and its projects.

Topics include:

  • How to organize and use a company's financial reports
  • What amount of cash must be made available to the contractor to complete a project
  • Why the early payment of supplier invoices can enhance profitability
  • How to quantify the time value of money in financial decisions
  • What tax amount is owed by a company and how it impacts the bottom line
  • How to control project costs
  • What financial sources are available to a construction contractor for capital expansion
In Financial Management and Accounting Fundamentals for Construction, the reader will learn about accounting fundamentals, project-related financial matters, and company level financial issues—three factors that are key to career success.


  • The Big Paradox
  • What is Financial Management?
  • Project-Level Controls
  • Time value of money
  • Entrepreneurial Issues
Understanding Financial Statements
  • Generally Accepted Accounting Principles
  • Cash and accrual bases: Two ways to look at accounting
  • Cash Basis of Accounting
  • Accrual Basis of Accounting
  • Accounts
  • Account Hierarchy
  • Financial Reports
  • Bookkeeping
  • The Balance Sheet
  • Balance Sheet layout
  • Balance Sheet Account Categories in Detail
  • The Fundamental Accounting Equation
  • Asset Values
  • The Fundamental Equation and Owners’ Risk
  • Balance Sheet for Fudd Associates, Inc.
  • Key Accounts
  • The Income Statement
  • Revisiting the Airport Screen
  • Components of an Income Statement - More Details
  • The Babel Tower of Accounting
  • The Statement of Cash Flows
  • Contract Backlog
  • Public Corporations
Analyzing Company Financial Data
  • Vertical Analysis: Financial Ratios
  • Liquidity Indicators: Can this company get cash in a hurry?
  • Profitability Indicators: Is this company making enough profit?
  • Efficiency Indicators: How long does it take a company to turn over its money?
  • Capital Structure Indicators: How committed are the owners?
  • Other Indicators
  • Asset Newness
  • Horizontal Analysis: Tracking Financial Trends
  • Time Series Graphs
Accounting Basics
  • Transaction Processing
  • Posting entries to the ledger
  • Relationship of work- in-progress and revenue/expense accounts
  • Closing the accounting cycle
  • Recognition of income
  • Transactions during a period
  • Posting to the general ledger during the accounting period
  • Closing actions at the end of the period
Project-Level Cost Control
  • Objectives of Project-level Cost Control in Construction
  • Unique Aspects of Construction Cost Control
  • Types of Costs
  • The Construction Estimate
  • Cost Control System
  • Building a Cost Control System
  • Cost Accounts
  • Cost Account Structure
  • Project Cost Code Structure
  • Cost Accounts for Integrated Project Management
  • Earned Value Analysis
  • Labor Data Cost Collection
  • Charges for Indirect and Overhead Expense
Forecasting Financial Needs
  • Importance of Cash Management
  • Understanding cash flow
  • Retainage
  • Project cost, value and cash profiles
  • Cash Flow Calculation -A Simple Example
  • Peak Financial Requirements
  • Getting Help from the Owner
  • Optimizing Cash Flow
  • Developing a Project Cash flow Estimate
  • Using software for cash flow computations
  • Company-level cash flow planning
  • Strategic cash flow management: "Cash Farming"
  • Project and General Overhead
  • Fixed Overhead
  • Considerations in Establishing Fixed Overhead
  • Breakeven Analysis
  • Basic Relationships Governing the Breakeven Point
Time Value of Money and Evaluating Investments
  • Time value of money
  • Interest
  • Simple and compound interest
  • Nominal and effective rate
  • Equivalence and MARR
  • Discount Rate
  • Importance of Equivalence
  • Inflation
  • Sunk Costs
  • Cash flow diagrams
  • Annuities
  • Conditions for Annuity Calculations
  • Calculating the Future Value of a Series of Payments
  • Summary of equivalence formulas
  • Worth Analysis Techniques: An Overview
  • Present Worth Analysis
  • Investments with different life spans
  • Equivalent Annual Worth (EAW)
  • Recovering investment capital
  • Internal Rate of Return
  • A Practical Example Using PW Analysis
  • Comparison Using EAW
  • An IRR Example - Owner Financing Using Bonds
Construction Loans and Credit
  • The Construction Financing Process
  • An Example Developmental Project
  • The Amount of the Loan
  • How is the Cap Rate Determined?
  • Mortgage Loan Commitment
  • Construction Loan
  • Lines of Credit
  • Interest Paid on outstanding balance
  • Commitment fees
  • Compensating balances
  • Clean-up requirement
  • Collaterals
  • Accounts Receivable Financing
  • Trade Credits
  • Long Term Financing
  • Loans with end-of term balloon payments
The Impact of Taxes
  • Types of taxes
  • Income Tax Systems
  • Alternatives for company legal organization
  • Taxable Income: corporations
  • Taxable income: individuals
  • Itemized deductions, standard deductions and personal exemptions
  • The Tax Significance of Depreciation
  • Calculating Depreciation
  • Straight-Line Method
  • The Production Method
  • Depreciation Based on Current Law
  • Marginal Tax Rates
  • Tax credits
  • Tax payroll Withholding
  • Tax payment schedules
  • Marginal, average and effective tax rates
  • Net Operating Losses
  • Taxes on dividends and long-term capital gains
  • Alternative Minimum Tax
  • Typical Chart of Accounts
  • Further Illustrations of Transactions
  • Compound Interest Tables

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Financial Management and Accounting Fundamentals for Construction
by Daniel W. Halpin
2009 • 308 pages • $98.00 + shipping
Texas residents please add 6.75 % sales tax

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