Winter 2010

Track Bid and Budget Data To Avoid Cost Overruns
Cost overruns are a perennial drain on profits. The culprits can range from design changes to weather-related delays, from do-over work to unanticipated increases in the cost of raw materials. Regardless of the source, the end result is less money for the contractor. While there are no guaranteed methods of preventing cost overruns, contractors can reduce the chances that unanticipated extra costs will adversely affect their bottom line by making good use of cost tracking tools. Read more...

Contractor Success Webinar Series: Financial Power Tools and Best Practices for the Construction Industry
Somerset CPAs Construction & A/E Team and Associated Construction Publications invite you to participate in our upcoming webinar series. The webinars will be presented by Ken Hedlund and the construction experts of Somerset CPAs plus occasional guest industry experts and will be moderated by ACP's National Editor, Greg Sitek. These presentations will be beneficial for construction-industry business owners, COOs, CFOs and other key managers. Our schedule begins with "Retooling for the Recovery" on Tuesday, February 23, 2010. Read more...

National Construction Outlook
The end of 2009 brought down the curtain on the most recent seven-year business cycle with a resounding thud. Like with the overall economic cycle, the loss of jobs in construction lags the start of the contraction in construction by six to twelve months, and at year’s end the deepest construction job losses in a generation had occurred. According to the Bureau of Labor Statistics, construction employment is 15% lower than October 2008. Maintaining the cyclical trend, losses in non-residential labor and crafts were even with the average monthly loss of the past year, or slightly more than 50,000 jobs, while losses in residential employment had slowed to about one-third the average monthly loss over the same period. If the cycle holds form, non-residential job losses should ease in coming months as a recovery begins. Read more...

Effective Sales Strategies for Contractors, Architects and Engineers
In competing for jobs, many contractors, architects and engineers tend to underestimate and undersell their firm's strengths. It's not difficult to understand why: Selling doesn't come naturally to most people. Sales skills tend to be regarded as "soft" skills and viewed as much less important than craft or estimating skills. The reality, however, is that you need to develop a range of sales-oriented skills and techniques if you want to be successful. Here are some steps recommended by sales professionals that can help improve your sales skills and boost your firm's chances of winning contracts. Read more...

New SBA Loan Program Can Help Construction Industry
A new federal loan program may provide some measure of relief for small businesses whose cash flow has been impaired as a result of the economic downturn. America's Recovery Capital (ARC) loan program was created by the U.S. Small Business Administration (SBA) to offer no-interest, deferred-payment loans of up to $35,000 to qualified small businesses. Read more...

Contractor to Pay Indiana Sales or Use Tax on Supplies Instead of Passing Tax on to Customer
In a recent Indiana Tax Court case (Lafayette Square Amoco, Inc. v. Indiana Department of State Revenue 867 N.E.2d 289 (Ind. Tax Ct. 2007)), the court stated that if consumable supplies and rental equipment used by a taxpayer are not sold directly to the customer, then the sales and/or use tax liability for materials consumed by the taxpayer cannot be transferred to the customer. Read more...

Developments in Tax and Business
America’s construction sites are much safer than they were a decade ago, according to the Associated General Contractors of America (AGC). The organization announced the results of a new analysis that found a 38% drop in construction safety incidents and a 47% decline in the construction fatality rate since 1998. The AGC attributed the decline in accident and fatality rates to the federal government's adoption of a safety oversight approach known as "collaborative safety." Read more...

Somerset Construction & A/E Team News
We will launch the 2010 Indiana Construction Industry Financial Performance and Salary & Benefits Survey on January 25, 2010. This unique, industry-specific survey provides valuable information about the financial standing of the Indiana construction community, outlining salaries and benefits by position, balance sheets, statements of operations and other information as provided by participating general and trade contractors.

Somerset’s 2009 financial survey, based on 2008 financial results, indicated Indiana contractors maintained strong financial performance in areas including gross and net profit, working capital, debt-to-equity, equity and cash flow. The economic recession and the trailing force on the construction community had not yet had much impact on local contractors in 2008. One indicator for most survey categories that a challenging environment was evident can be found in months in backlog. Not surprising the three biggest concerns identified were health care costs, sources of future work and federal tax legislation.

Ken Hedlund states, "Since last year's survey, the economy has changed dramatically. Less work, more competition, reduced margins and slower pay has created the most challenging construction environment in years. Many contractors have diversified into new markets, cut expenditures, laid off personnel and/or reduced salaries and benefits.” The 2010 survey will be our most important survey to-date. We will be sending out the participation link on January 25, 2010, and we urge your firm to complete the survey. Please contact us with any questions.

Somerset is proud to be a sponsor and active member of the Indiana Subcontractors Association. Our Construction & A/E Team will be exhibiting at their annual "Construction Networking Event of the Year" on Thursday, February 25, 2010, at the Indiana Convention Center. Please stop by and see us at Booth #57. The event will begin with a luncheon featuring representatives from state universities presenting their Master Plans. The trade show then opens and the much anticipated Networking Pavilions begin. The afternoon will lead into the GC of the Year reception and awards dinner. Melissa Farmer is the Trade Show Committee Chair and welcomes your inquiries about the event. Also, please visit ISA's web site.

Somerset Practical MBA Program--Attend in Person or Via Webinar. Our popular MBA program is scheduled through 2011. The next session is on Wednesday, January 27, 2010, when Valerie Brennan and Donna Butler will present "Recruiting and Retaining Good People." Click here to see the full schedule and program details.

In Other News - Somerset publishes a variety of newsletters in addition to Work-In-Process--such as Employee Benefit Plan Commentator, Wherewithal, Real Estate Focus, Tax Times (including recently published Tax Planning Letters for Individuals and Businesses) and several others. Please visit the Newsletters page of our web site to read the archives and sign up to have new issues delivered to your email inbox.

Tell Us How We Are Doing and You May Win Pacers Tickets. If you are a Somerset client, please take our Client Satisfaction Survey by January 15, and you will be entered into a drawing for two tickets to the Pacers vs. Philadelphia on Saturday, January 23. Take our survey now.

We are proud to be celebrating our 50th anniversary in 2010! Somerset’s roots began in 1960 with the founding of Whipple & Company, a certified public accounting firm. Read more...

Work-In-Process is provided by Somerset CPAs for our clients and other interested persons upon request. For additional information on the issues discussed, please contact Ken Hedlund, Jay Feller, Steve George, Chris Mayfield or Rebecca Ogle of our Construction & A/E Team. Learn more about our Construction & A/E Team by clicking the photo to the left to watch our video. Since technical information is presented in generalized fashion, no final conclusion on these topics should be made without further review. This document is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer.