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Cash Flow Glossary Term

Construction Input Costs

The direct costs subcontractors pay to deliver field work, including labour, materials, fuel, and equipment. These costs fluctuate with market conditions, directly squeezing margins if contracts aren't priced accordingly. Tracking them closely helps subcontractors identify when to renegotiate rates or escalation clauses.

Related Terms

Fuel Surcharge

Cash Flow

A variable fee added to invoices to offset rising fuel costs for equipment, vehicles, and machinery. Rates are typically tied to a published fuel index and adjusted weekly or monthly. Subcontractors should confirm surcharge terms in their master service agreements before mobilising.

Job Costing

Cash Flow

The process of tracking all costs associated with a specific job or project, including labor, equipment, materials, and overhead. Accurate job costing is essential for understanding profitability.

LEM (Labour, Equipment, Materials)

Cash Flow

A breakdown of costs on a field ticket or invoice, separating charges into labor hours, equipment usage, and materials consumed.

Ticket Rejection

Cash Flow

When an operator returns a field ticket for correction before approval. Common causes include missing information, rate discrepancies, or insufficient documentation. Rejections delay payment and require rework.

Shut-In

Cash Flow

A temporary halt to production or operations at a well or facility, which often results in subcontractors being stood down with little notice, directly impacting billable hours and crew scheduling. Understanding shut-in clauses in your service agreement is critical, as they typically limit or eliminate your ability to claim standby pay or mobilisation costs during the downtime.

Embedded Cost

Cash Flow

Expenses already built into a contract rate that cannot be billed separately, such as mobilisation, PPE, or overhead. Subcontractors must identify these upfront to avoid absorbing unrecovered costs. Missing embedded costs during bid review is a common source of margin loss.

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