Stimulus Funding Boosts Construction Spending

The stimulus plan has played out about as expected when it was enacted nearly eight months ago. It has provided a very large boost to the economy in mid 2009 and a modest boost to construction spending. The impact of the stimulus plan has clearly been less than its sponsors claimed initially and in recent assessments but more than its detractors credit to it. Reported assessments of the stimulus plan have been muddied by three measurement problems — use of the wrong measuring stick, difficulty separating the stimulus plan from other Obama spending initiatives and failure to recognize that only about 1/3 of the stimulus plan is quick, recession fighting, fiscal pump priming.

Stimulus expenditures were about $160 billion by the end of August. But the federal check register is not the proper measuring stick. Washington takes one to two months to reimburse after contractors and other stimulus recipients incur expenses on stimulus project work. The proper measuring stick is a dynamic measurement of how much money was spent in the economy that would not have been spent if the stimulus plan had not been passed.

By this measure, the stimulus plan boosted GDP growth by about 3% in both the spring and summer quarters. This is the consensus of widely followed economic forecasting models which do not use the federal check register as an input into the model. This substantial boost consists of a small amount spent on.... Read More>>>

Accounting and Record Keeping

There is no function more critical to your success in the construction business than effective management of financial and other records. Only with good accounting and record-keeping policies and procedures can you achieve the following functions: select the information you need to monitor the performance of current and completed projects; manage payables and receivables; forecast cash needs; improve your estimating function based on historical job cost; tag the best-performing and non-performing employees; identify unprofitable customers; expose dishonesty; comply with tax laws, while taking every advantage permitted by them; provide information required by various government agencies; know the financial status of your company at any given point in time; and archive records that will be required for various purposes in the future.

Professional expertise such as that of a certified public accountant is required to design the most effective record keeping system for both corporate and tax purposes. Once the systems are in place they can be maintained by a competent in-house bookkeeper or bookkeeping staff and reviewed periodically by your CPA. Your outside CPA is.... Read More>>>