Inside the Huddle: How SRC Lexington Built a Great Game Culture

In this day and age, when the construction labor force seems tighter than ever before, employers must find ways to set themselves apart from their competitors in order to attract and retain the top talent. In July, Harding, Shymanski & Company, P.S.C. co-hosted a seminar featuring SRC of Lexington, Inc. In order to create a winning culture, the company adopted the Great Game of Business strategy developed by Jack Stack. During the event, Rob Shear, General Manager of SRC of Lexington, Inc. (SRC Lexington), and four employee-owners shared their insights on what it takes to build a Great Game culture to help their company thrive.

In addition to sharing personal insights and lessons learned, Shear shared that they focus on the principles of the Great Game:
  • Know and teach the rules: Educate employees about the business to help them think like an owner.
  • Follow the action and keep score: Empower employees to make better decisions and act like an owner.
  • Provide a stake in the outcome: Engage employees by providing them with a stake in the outcome so that they feel like an owner.
  • All three elements focus on the Critical Number that the organization defines together to establish what "winning" means for the organization.
Participants at the event particularly appreciated that the SRC Lexington team shared "practical applications" as to how they have implemented the concepts. Among the practices that are working well for them are:
  • Strong employee committees that are run by people outside of the management team.
  • Temporary committees that address issues of a limited scope.
  • A financial education system that is run by employees from the Ownership Culture Committee.
  • Rewards and recognition programs.
  • High-involvement planning across the organization.
When asked why he was willing to share the "secret to their success" with so many others and potential competitors, Shear suggested that - while the type of culture change is not for every organization - he is passionate about the positive environment and financial impact the culture shift has created for SRC Lexington.

Learn more about the Great Game of Business or SRC Lexington, or to explore whether an employee stock ownership model is right for your organization, contact Paul Esche, CPA, CCIFP, CCA at 800.880.7800 ext. 1335 or email pesche@hsccpa.com
Understanding the Basics of Accounting for Contract Change Orders and Claims
 
For most contractors, change orders are a part of business. However, financially accounting for the change orders can become complicated, due to the various stages of change orders.   Typically, a contractor has three stages of change orders-approved change orders, unpriced change orders, and unapproved change orders. In addition, many change orders turn into construction claims, which also take careful consideration to financially recognize.
Accounting for approved change orders is relatively simple: once it is approved, the contract price on the work-in-progress (WIP) schedule is reflected to account for the change order and revenue, expenses, and over/under billings are adjusted accordingly.

Accounting for approved but unpriced change orders can prove challenging. In this instance, for revenue to be recognized, recovery should be probable. Typically, recovery is probable if there is written approval on the scope, separate documentation for change order costs that are identifiable and reasonable, and past favorable experience in negotiating change orders.
Accounting for unapproved and unpriced change orders is the most challenging. Unpriced and unapproved costs should be treated as costs of contract performance. If the costs are deemed to be unrecoverable, the total costs to complete the project associated with the contract should be adjusted. If it is deemed probable that the adjusted contract price will be more than the costs, then the contract can be adjusted but only to the extent of the costs. Profit should be deferred until it is approved.

Many times, unapproved change orders can become constructions claims. There are two methods to price out a potential claim: the total-cost method and direct cost method. Recognizing revenue due to claims is only appropriate if it is highly probable that the claim will result in additional revenue and the amount can be reasonably estimated.

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SUCCESSFUL SUCCESSION PLANNING STRATEGIES

As 70 million baby boomers reach retirement age, it is estimated that 12 million privately owned businesses will sell or bequeath assets worth $10 trillion over the next two decades. Proper succession planning is just as crucial for the boomers' employees as it is for the exiting business owners. Our firm has seen a steadily growing number of contractor clients enter into business transactions over the past two years, and there are many more working on plans for that day.

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UPCOMING EVENTS
  
Wednesday, August 16, 2017  

FOUNDATION Software Demonstration -  9:00 a.m. - 11:00 a.m. CST

Want to learn more about FOUNDATION┬« construction accounting software? Steve will host a two-hour session in which you'll see how FOUNDATION┬« can improve and automate your accounting and reporting processes
.

FOUNDATION Users Training  - 1:00 p.m. - 3:00 p.m. CST 
You won't want to miss this opportunity to gain valuable tips and insights that will help maximize the way you use FOUNDATION┬« for your business. Get an overview, get a refresher, or get your questions answered!  
ABOUT OUR CONSTRUCTION, REAL ESTATE AND MINERALS INDUSTRY

Because Harding, Shymanski & Company, P.S.C. is committed to providing quality service to our construction, real estate, and mineral industry clients, we have selected a team of dedicated professionals to serve as your industry's consultants. These individuals understand the language and key issues unique to your industry and possess the drive and determination to help you manage your company on a proactive basis.
SEE WHAT OUR CLIENTS ARE SAYING...

We have come to rely on Harding Shymanski not only for Tax and Audit services, but also as a trusted advisor in many of our strategic business decisions. Whether it's consulting on matters about our ESOP or critical financial positioning, HSC provides consistent and relevant advice.
After working together for over 12 years, Harding Shymanski understands our ever-changing business. They have helped us transform our company as we expand our services beyond the traditional Architecture, Engineering and Interior Design firm to include Development services. On a personal note, the members of HSC have been invaluable to me as a new President and CEO, and I know I can count on them to provide guidance as we grow into the future.
 
- Aric Andrew, AIA, LEED AP, President & CEO, Luckett & Farley

Disclaimer:
The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice.
Harding, Shymanski & Company, P.S.C.
800.880.7800  |  info@hsccpa.com  |  www.hsccpa.com 
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