Input Cost Index

A portion of a larger contract or payment released in stages upon meeting set milestones or schedules. Subcontractors are often paid in tranches tied to project phases or work completions. Understanding tranche structures helps you plan cash flow and resource deployment accordingly.

Materials or equipment stored at your job site but owned by the supplier until you use them. You only pay when items are consumed, reducing upfront capital tied up on remote projects. Common for frequently used consumables like fittings, gaskets, and PPE on long-duration field contracts.

A disconnect between what a subcontractor quoted and what the client expects to pay for. This often surfaces during invoicing when scope, rates, or billing terms were not clearly agreed upon upfront. It can delay payments and strain relationships with prime contractors.

Materials, labour, and equipment costs tied to commercial and industrial construction projects. Subcontractors track these input costs to price bids accurately and protect margins. Rising input costs can erode fixed-price contract profitability quickly.

The average number of days it takes to collect payment after a sale. For field service companies, DSO measures how long between completing work and receiving payment. Industry benchmarks range from 30-60 days.

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.

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