South Carolina Business Management and Law for Residential Builders

An LLC is a hybrid that gives members limited liability with pass-through (no double) taxation and ownership held in memberships rather than stock, while a C Corporation pays tax on its own profits and shareholders are taxed again on dividends (double taxation).

A joint venture is formed by two or more companies for one specific project and generally ends with it, while the other structures are ongoing, permanent business entities.

The cash method records income when received and expenses when paid; the accrual method recognizes income when earned/services occur and expenses when incurred, regardless of when cash changes hands.

In bid peddling the subcontractor approaches the general contractor after the award to lower its bid-day price, whereas in bid shopping the general contractor solicits lower prices from other subcontractors.

Bid rigging is collusion among contractors coordinating their bids to fix the award outcome (forbidden by some state statutes on public projects), while bid peddling is a single subcontractor cutting its price after the award.

An arbitrator acts as a judge and renders a decision that legally binds all parties, while a mediator does not set terms but facilitates dialogue so the parties reach a mutual, fair agreement.

In a lump-sum contract the contractor completes the work for a predetermined price and absorbs essentially all unforeseen cost risk, while a cost-plus contract reimburses actual labor and material costs plus a percentage or fixed fee for overhead and profit.

A unit-price contract is used when the extent of work cannot be fully determined in advance and pays the contractor per unit for actual quantities used, while a lump-sum contract fixes one total price.

Addenda are changes issued before the contract award (they become part of the bid documents and then the contract), while modifications are changes made after the contract is signed and executed.

A material breach (e.g., owner refusing to pay or contractor refusing to perform) is a serious violation that may void the contract and likely leads to litigation, while an immaterial breach usually does not terminate the contract and the injured party may only sue for the value of damages.

Named peril policies cover only the perils specifically listed (e.g., fire, lightning, wind), while all-risk policies cover all perils not specifically excluded.

A completion bond assures the project's financial backers that the project will be completed on time, while a performance bond guarantees for the owner that the contractor will complete the contract within its time frame and conditions.

Project overhead covers job-specific indirect items (bonds, temporary storage, temporary office, security guard, utilities, dumpsters, portable toilets) typically 5–10% of the total bid, while company overhead covers business costs such as office rent, accounting fees, taxes, telephone, legal fees, and administrative labor.

Free float is the time an activity can be delayed without impacting the early start of the next activity, while total float is the leeway in starting or completing an activity without delaying overall project completion.

CPM graphically illustrates the interdependent relationships between tasks, while bar chart and calendar methods share the weakness of not showing activity interdependencies or delay impacts on other tasks.

Quantity take-off individually estimates units of materials and labor for each task and is generally the most accurate (but slower), while the square-foot method multiplies square footage by a unit cost for a fast estimate that ignores project-specific details.