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Cash Flow Glossary Term

Breakeven Cost

The minimum amount a subcontractor must charge to cover all project expenses without making a loss. It includes labour, equipment, fuel, insurance, and overhead. Pricing below breakeven erodes margins and can threaten business viability.

Related Terms

Spring Breakup

Cash Flow

The seasonal period when thawing ground and flooding restrict heavy equipment access to remote job sites. For subcontractors, it typically means project delays, suspended haul routes, and reduced billable work. Plan cash flow carefully to cover the slow period.

CWIP (Construction Work in Progress)

Cash Flow

An accounting category tracking costs for projects not yet complete or placed into service. For subcontractors, your invoiced work may sit in a client's CWIP account until project completion. This can affect payment timing and how clients prioritise approving your billings.

Performance-Based Contract

Cash Flow

A contract where your payment depends on meeting specific targets, such as uptime, output, or safety metrics. Underperforming against those benchmarks can trigger penalties or reduced fees. Subcontractors must track KPIs closely to protect their margins.

Progress Billing

Cash Flow

Invoicing for work completed to date on a longer project, rather than waiting until project completion. Helps subcontractors maintain cash flow on extended jobs.

Fixed-Rate Contract

Cash Flow

A contract where the subcontractor agrees to complete a defined scope of work for a set price, regardless of actual labour or material costs incurred — meaning cost overruns come directly out of your margin. Common in construction and turnaround work, these contracts reward efficient crews and tight project management but carry significant financial risk if scope creep or site conditions aren't carefully managed upfront.

Lump Sum

Cash Flow

A pricing model where the contractor agrees to complete a defined scope of work for a fixed total price, regardless of actual costs incurred.

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