NM General Contractor cheat sheet

Working capital = current assets − current liabilities; it measures the cash cushion available to fund payroll, materials, and retainage gaps on active jobs.

Retainage receivable is an asset, not cash: track aged retainage by project and bill it as a separate line so collection lag does not distort monthly cash flow.

Break-even revenue = total fixed overhead ÷ gross margin percentage; a firm with $300,000 overhead and 20% margin needs $1,500,000 in annual volume before profit.

Gross profit = contract revenue − direct job costs (labor, material, equipment, subcontract). Overhead, interest, and taxes are excluded from job gross profit.

Under the completed-contract method, revenue and cost are recognized only when the job is substantially complete; percentage-of-completion recognizes revenue in proportion to costs incurred to date.

Job cost codes must separate labor burden (payroll taxes, insurance, benefits) from base wage; burden typically runs 25–40% of base wage for field labor.

A financial statement prepared by a CPA (reviewed or audited) is generally required to obtain bonding capacity beyond small single-job limits.

Cash flow forecast horizon should cover at least one full billing cycle plus retainage lag, because pay-when-paid clauses can delay receipts 60–90 days.

Equipment cost can be charged to jobs by internal rental rate (ownership + operating cost per hour) rather than actual purchase price, smoothing cost allocation.

Contractor licensing in New Mexico is administered by the Construction Industries Division (CID) of the Regulation and Licensing Department; the General Contractor (GB-98) license is the classification for general building work.

License classifications are tied to trade scope (e.g., GB-98 general building, GF-98 general construction, and specialty trades); bidding or contracting outside your licensed classification is grounds for discipline.

A qualifying party must pass the applicable trade and business/law examinations and hold the license through the contracting entity; loss of the qualifying party generally requires replacement within a set period.

License renewal is periodic, and continuing education and fee payment are conditions of keeping the license active; working on a lapsed license exposes the contractor to unlicensed-contract remedies.

New Mexico requires proof of a license to pull permits for licensed trades; permits are issued by CID or delegated local jurisdictions depending on the authority having jurisdiction.

Contractors must carry workers' compensation coverage for employees and provide proof; failure to maintain required coverage can result in license suspension.

Unlicensed contracting can render a contract unenforceable for collection of compensation and subjects the contractor to citations and civil penalties.

License number must appear on advertisements, bids, and contracts as required by CID rules; misrepresenting license status is a violation.

Change orders, subcontracts, and proposals should identify the license classification and number to avoid disputes over scope authority.

Contract types: lump sum (fixed price, risk on contractor), unit price (paid per measured quantity), cost-plus (reimbursable cost plus fee), and GMP (guaranteed maximum price with savings share).

A pay-when-paid clause ties subcontractor payment to owner payment to the prime; a pay-if-paid clause can shift the risk of owner nonpayment more fully to the subcontractor depending on jurisdiction.

Retainage is typically 5–10% withheld from progress payments; release timing is governed by contract and New Mexico prompt-payment provisions.

Substantial completion triggers warranty start, retainage release eligibility, and often partial release of liquidated damages exposure; punch list items are completed after substantial completion.

Liquidated damages must be a reasonable forecast of probable loss at contract formation; unenforceable penalty clauses are those disproportionate to anticipated harm.

Notice requirements are conditions precedent: late notice of delay, differing site conditions, or change can waive entitlement regardless of merit.

A differing site condition claim generally requires prompt written notice, documentation of the physical condition, and proof the condition differed materially from the contract documents.

Record-keeping for claims should include daily reports, photos, weather logs, correspondence, and cost segregation so delay and impact costs can be substantiated.

Closeout package typically includes as-builts, O&M manuals, warranties, lien waivers, final lien releases, and consent of surety where bonds apply.

Quantity takeoff: measure net quantities from drawings and specs, then apply waste/overlap factors separately so the takeoff stays auditable.

Unit costs should separate material, labor, equipment, and subcontract; applying a single composite unit price hides the drivers of variance.

Labor hours = quantity ÷ crew productivity rate; labor cost = hours × crew average wage × (1 + burden).

Bid strategy: add project indirect costs (supervision, temporary facilities, permits, insurance, bond premium) before applying markup for overhead and profit.

Bond premium for performance and payment bonds is typically a percentage of contract value, tiered by contract size, and must be carried in the bid.

Contingency should reflect identifiable risk (unknowns, escalation, weather) and is not the same as profit; track contingency drawdown separately.

Escalation: apply material price escalation for the period between bid and installation using published indices or vendor quotes with validity dates.

Balanced bidding avoids front-loading or unbalancing unit prices; unbalanced bids can be rejected and create cash-flow and dispute risk.

Bid documents review should confirm addenda acknowledgment, alternates, allowances, unit-price schedules, and specified substitutions before submission.

Critical path method (CPM): the critical path is the longest path through the network; total float = late start − early start (or late finish − early finish).

Free float is the delay a activity can absorb without delaying any successor; total float is delay without delaying project finish.

A forward pass computes early start/finish; a backward pass computes late start/finish; float is the difference.

Crash cost slope = (crash cost − normal cost) ÷ (normal duration − crash duration); crash the lowest-slope activity on the critical path first.

Resource leveling changes start/finish dates to resolve resource peaks; resource smoothing adjusts within float without changing the critical path.

Earned value: CV = EV − AC; SV = EV − PV; CPI = EV ÷ AC; SPI = EV ÷ PV. CPI below 1.0 means cost overrun.

Estimate at completion (EAC) = BAC ÷ CPI when current cost performance is expected to continue; EAC = AC + (BAC − EV) when remaining work is at budget.

Schedule updates should record actual start/finish and remaining duration; comparing updates distinguishes excusable delay from contractor-caused delay.

Look-ahead schedules (3–6 week) convert the master schedule into short-interval work plans and expose material and crew constraints.

OSHA fall protection for general construction is required at 6 feet or more above a lower level; guardrails, safety nets, or personal fall arrest systems are acceptable systems.

Excavations 5 feet or deeper require a protective system (sloping, shoring, or shielding) unless the excavation is entirely in stable rock; a competent person must inspect daily.

Scaffold users must be trained; scaffolds must be erected, moved, or altered only under the supervision of a competent person and inspected before each shift.

Hazard communication (HazCom) requires a written program, Safety Data Sheets, labeling, and employee training for chemicals on site.

Personal protective equipment: head, eye, face, foot, and hand protection per hazard assessment; hearing protection when noise exceeds 85 dBA time-weighted average.

Cranes and rigging: load charts, qualified operators, and exclusion zones under suspended loads; never work under a suspended load.

Environmental: stormwater pollution prevention plan (SWPPP) with best management practices for erosion and sediment control; inspections after rain events.

Hazardous waste and spills: reportable quantity releases require notification; fuels and chemicals stored with secondary containment.

Silica and other dust controls: wet cutting, ventilation, and respiratory protection per exposure assessment under OSHA respirable crystalline silica standard.

Concrete: water-cement ratio controls strength and durability; lower w/c ratio increases strength and reduces permeability. Curing maintains moisture and temperature for strength gain.

Concrete placement: consolidation by vibration removes air voids; cold joints form where fresh concrete is placed against already-set concrete and require proper bonding treatment.

Reinforcing steel: development length depends on bar size, concrete strength, and cover; lap splices transfer load through bond and must meet code length.

Structural steel connections: bolted (bearing vs. slip-critical) and welded; slip-critical connections resist shear through friction and require specified surface preparation.

Masonry: mortar joints, flashing, and weep holes manage moisture; control joints accommodate movement and shrinkage.

Wood framing: grading, moisture content, and fastening schedule govern performance; engineered lumber requires protection from moisture before enclosure.

Mechanical/electrical/plumbing rough-in coordination uses sleeve and penetration schedules; firestopping at rated assemblies must match the listed system.

Roofing: low-slope membrane systems (TPO, EPDM, modified bitumen) rely on proper slope, insulation, and flashing details to shed water.

Soils and earthwork: compaction to specified relative density or percentage of maximum dry density per standard proctor; moisture content near optimum for efficient compaction.