The Ultimate Construction Startup Checklist: Setting Your Project Up for Success

When launching a new construction project, having a comprehensive startup checklist is critical to ensure you cover all the essential bases. From obtaining the right permits and licenses to setting up efficient accounting systems, there are numerous moving parts to manage when kicking off a construction job.

In this article, we'll review The Ultimate Construction Startup Checklist, covering ten key action items to help you get your project started on the right foot and set it up for long-term success.

Action Item #1: Secure Necessary Permits and License

Before any construction work can commence, you must obtain the proper permits and licenses required for your project.

This often includes:

• General contractor license
• Building permits for the specific type of construction
• Trade licenses for electrical, plumbing, HVAC, etc.
• Environmental/zoning permits, if applicable
• Business licenses and tax registrations

Be sure to research your specific location's permitting and licensing requirements, as they can vary significantly by state, county, and municipality. Failing to acquire the necessary approvals can lead to hefty fines, project delays, and even legal complications down the line.

Action Item #2: Establish a Detailed Project Budget

One of the most critical components of a successful construction startup is developing a comprehensive project budget. This should account for all anticipated costs, including:

• Labor (employees, subcontractors, etc.)
• Materials and equipment
• Permits, licenses, and inspections
• Insurance and bonding
• Transportation and logistics
• Overhead and administrative expenses

It's also essential to build contingency funds to cover any unforeseen costs or changes during the project. A well-crafted budget will help you monitor spending, identify potential cost overruns early, and ensure profitability.

Action Item #3: Set Up Construction-Specific Accounting Systems

Effective accounting practices are essential for any construction business. You'll need to establish systems for:

• Job costing and project accounting
• Billing, invoicing, and accounts receivable
• Accounts payable and vendor management
• Payroll and employee compensation
• Inventory and equipment tracking
• Tax preparation and compliance

Many construction firms utilize specialized accounting software designed for the industry, such as Sage 300 CRE, Viewpoint, or Procore. These platforms offer features like progress billing, change order management, and integration with project management tools.

Action Item #4: Obtain Necessary Insurance and Bonding

Construction projects carry significant risks, so having the right insurance coverage is crucial. At a minimum, you'll likely need:

• General liability insurance
• Workers' compensation coverage
• Commercial auto insurance
• Professional liability (errors and omissions)
• Surety bonds (bid, performance, payment)

The specific requirements can vary by location and the type of construction work involved. Be sure to consult an experienced insurance broker specializing in the construction industry.

Action Item #5: Develop a Comprehensive Safety Plan

Jobsite safety should be a top priority from the start. Develop a detailed safety plan that addresses the following:

• Hazard identification and risk assessment
• Personal protective equipment (PPE) requirements
• Safety training and ongoing education
• Incident reporting and emergency procedures
• Compliance with OSHA regulations

Ensure all workers are properly trained, and safety protocols are strictly enforced throughout the project. This will not only protect your team but also help avoid costly fines and legal issues.

Action Item #6: Assemble a Qualified Project Team

Having the right people in place is essential for a successful construction startup. This includes:

• A project manager to oversee the entire job
• Site superintendent to manage day-to-day operations
• Estimator to bid on new work and manage costs
• Procurement specialist to source materials and equipment
• Safety coordinator to implement and monitor safety protocols
• Administrative staff for accounting, HR, and other support functions

Take the time to vet each team member's experience, qualifications, and fit for their role. Strong communication and collaboration between all parties will be crucial.

Action Item #7: Establish Vendor and Subcontractor Relationships

Construction projects rely heavily on a network of vendors, suppliers, and subcontractors. During the startup phase, you'll need to:

• Identify and pre-qualify reliable subcontractors
• Negotiate favorable terms with material suppliers
• Set up accounts and credit lines with key vendors
• Develop clear contracts and agreements
• Implement systems for managing and tracking subcontractor performance

Building these relationships will ensure you have the resources, materials, and expertise needed when it's time to break ground.

Action Item #8: Secure Necessary Equipment and Mobilize the Jobsite

Before construction can commence, you'll need to ensure you have all the equipment, tools, and materials on-site and ready to go. This includes:

• Heavy machinery (cranes, excavators, etc.)
• Power tools and hand tools
• Temporary structures (fencing, portable offices, etc.)
• Site preparation and utility hookups

Proper planning and coordination with vendors are critical to avoid delays in equipment delivery or material shortages. Also, remember to factor in the time and cost of mobilizing and demobilizing the job site.

Action Item #9: Develop a Robust Project Schedule

Creating a detailed project schedule is essential for managing timelines, resources, and dependencies. This should include:

• Key milestones and deliverables
• Sequencing of tasks and activities
• Duration estimates for each phase
• Resource allocation and staffing plans
• Contingency planning for potential delays

Regular schedule updates and progress monitoring will help you identify and address issues before they escalate. Effective scheduling also allows you to provide accurate updates to clients and stakeholders.

Action Item #10: Communicate Effectively with All Stakeholders

Strong communication is the foundation of any successful construction project. During the startup phase, be sure to:

• Establish clear reporting structures and decision-making processes
• Implement regular project status meetings and updates
• Develop communication protocols for change orders, RFIs, and other issues
• Maintain transparent, consistent dialogue with the client
• Ensure all workers understand their roles, responsibilities, and expectations

Keeping all stakeholders—from the client to the crew on the ground—informed and aligned throughout the startup process will help prevent confusion, delays, and potential conflicts later on.

Why Contractors Need Lumber's Bookkeeping Services for Construction Accounting

As a leading provider of construction accounting solutions, Lumber's Bookkeeping understands the unique financial challenges that construction firms face.

Construction companies that partner with Lumber's Bookkeeping avoid the common pitfalls of cost overruns, inaccurate financials, and poor visibility into project profitability. Our industry-leading accounting practices and software integrations provide the insights you need to maximize the bottom line on every job.

Launching a new construction project requires meticulous planning and organization to set the stage for success. By thoroughly addressing the ten key action items covered in this checklist - from securing permits to effectively communicating with stakeholders - you can establish a solid foundation for your construction startup.

Remember, construction accounting is a critical component of this process, particularly when it comes to managing costs and inventory of essential materials like Lumber. Embracing specialized accounting systems and best practices will give you the financial visibility and control needed to profitably navigate any construction project.

FAQ

Why is construction accounting important?

Construction accounting is essential for construction firms to manage project costs, cash flow, job costing, compliance, and profitability effectively. The industry's unique financial complexities require specialized accounting practices and software.

What type of accounting is used in construction?

Common types of accounting used in construction include job costing accounting, fund accounting, percentage of completion accounting, and specialized construction accounting software designed for the industry.

What is retention in construction accounting?

Retention, also known as retainage, refers to a percentage of each progress payment that the client withholds until the project is completed. This acts as a form of security to ensure the contractor fulfills their obligations.

What is the best accounting software for construction?

Some of the top construction accounting software options include Sage 300 CRE, Viewpoint, Procore, Acumatica, and ComputerEase. The best solution depends on the size and needs of the specific construction firm.

What are the two important accounting issues related to self-constructed assets?

The two key accounting issues for self-constructed assets are: 1) properly capitalizing labor, materials, and overhead costs, and 2) determining the appropriate depreciation method and useful life for the self-constructed asset.

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