2026 Construction Outlook – How CFOs Can Navigate a Shifting Market with Scott Damecki

Rishi Srivastava (00:00)
Welcome to Finance at the JobSite, the podcast where construction finance meets the field. I’m your host Rishi Srivastava, founder of Beiing Human. In each episode, I sit down with construction CFOs, controllers, owners, project managers, IT leaders, ERP consultants, and industry experts to uncover how they connect the back office with the field, choose and implement technology, manage cash flow, and drive profitable projects.

Whether you are running the numbers, leading the team, or designing the systems that keep projects moving, this is your place to learn what’s working, what’s broken, and what’s next in construction finance.

Rishi Srivastava (00:37)
Today our guest is Scott Domecki. Scott, welcome.

Scott Damiecki (00:40)
Hey Rishi, how you doing?

Rishi Srivastava (00:41)
Good. Could you tell us a little bit about yourself?

Scott Damiecki (00:44)
Sure, yeah, I’m Scott D’Amici. I’m the construction industry practice leader for Kone Resnick. We’re a CPA and business advisory firm. Got started in my career probably 27 plus years ago, right after college. I grew up on Long Island out on the East End. Went to college at SUNY Fredonia in Western New York.

And then when I graduated, moved down to Maryland, just outside the DC area. And I’ve been here ever since. And I’ve been doing construction accounting that whole time. So yeah, I love working in the industry and love the people in the industry as well.

Rishi Srivastava (01:23)
I get a really positive vibes from you Scott. The first section here is on market and outlook. You lead Hone Resnick’s construction industry practice and have 25 plus years in construction accounting. What’s the state of the union for contractors as we head into 2026?

Scott Damiecki (01:41)
Yeah, think we’re, you know, there’s a lot of, there’s been a lot of uncertainty, I think, right in 2025. And I think for the most part, 2025 has been a fairly strong year in construction. You know, if you look at construction spending, it probably peaked sometime in 2024. And so we’ve been in a little bit of period of contraction since that peak.

but still pretty healthy, you know, overall. So there are certainly challenges, I think, that everybody knows about with, you know, recent policy changes and tariffs, know, immigration policy. Obviously, most recently, the government shutdown and what’s going to happen there. I know there’s been some news of some large-scale projects with federal funding being frozen potentially. So obviously, there’s some risks associated with that.

And labor, labor continues to be a challenge. I think in the last five years, if you’ve asked contractors what’s their number one risk, it’s labor shortage and the skilled workers. So that continues to be there. And obviously we have some inflationary pressure along with the interest rate environment. So there’s a lot of things going on, but I think there’s still some positivity out there. When you talk to most contractors, most of them are pretty optimistic about the future.

And I think there’s some sectors that are probably posed for some healthy growth if we see some further interest rate decreases by the Fed. So it’s a little bit unpredictable. I listen to a lot of economists. I certainly am not an economist, but I’m always intrigued on what they’re seeing and what they see in the forecast for the future years to come.

Rishi Srivastava (03:14)
Interest rates just moved again. Which contractor types feel that first? GCs versus subs versus developers? And how quickly do you see the impact in backlog, bonding, and bank covenants?

Scott Damiecki (03:28)
Yeah, think when interest, you know, it’s interesting when interest rates go up, right? I think borrowing costs go up pretty quickly when the Fed adjust rates up. But when rates go down,

there’s a little bit more of a lag on the impact to the borrowers. The banks are a little bit slower to drop rates. There’s not an immediate impact. I would say that there’s obviously a little bit of a domino effect. Developers obviously are kind of on the front end. They need to pencil their projects. So if they’re using an interest rate and the deal doesn’t pencil out, that job doesn’t even go to bid.

there’s opportunities certainly, you know, when the rates are going down, probably more deals are going to pencil. And so that’s good, obviously for developers, but in turn, when deals do pencil, there’s bids, the GCs and the subs are bidding on work. And so that’s a good thing for contractors when rates go down. But I think, you know, the subcontractors I would say too are

in rate environments with interest rates higher than they have been historically, it’s an impact on the subs probably more so than anybody just because they’re financing a lot of the projects and their line of credits are financing those projects. So they have to fund payroll regardless. And it can take 120 days for them to be paid.

Rishi Srivastava (04:46)
Mm-hmm.

repay.

Scott Damiecki (04:51)
So I think ⁓ subs have a lot of things to kind of deal with when in the higher interest rate environments.

Rishi Srivastava (04:58)
Yeah, that 45 to 60 days delay in getting a payment from GC, that can mean a whole lot for a sub in a higher interest rate environment.

You mentioned you track weekly economic insights which macro indicators most reliably predict near-term pain or momentum for contractors.

Scott Damiecki (05:18)
Yeah, I definitely get, you know, lot of weekly newsletters and, you know, I enjoy, Annurban Basu’s economic newsletters from Sage Policy Group. Those are really good. But from a, from a real metric perspective, I look at Construction Connect. They have a project stress index. and that tracks kind of.

delayed bids, on-hold projects, abandonments. It’s kind of a nice index to look at. I’m seeing what’s happening with the macro trends in the industry. And then I also look at the architectural billing index, which is a monthly indicator. And that index, is anything less than 50 means that the architects are less busy than they were the month prior.

Rishi Srivastava (05:52)
involved.

Scott Damiecki (06:03)
And so you can kind of look at that as a leading indicator as well. Obviously, the architects are on the front end of a lot of these projects.

Unfortunately, that one’s been under 50 pretty much the entire year of 2025. Every month has been less than 50. it’s not a great picture if you just look at that in a vacuum. Obviously, there’s other things going on that impact the industry. But those are the two that I try to look at to understand what’s going on more at the macro level. And obviously, every region has some differences.

Rishi Srivastava (06:35)
Does any of these indicators differ whether you’re a GC or a sub? Maybe one of the indicators is more important for one segment.

Scott Damiecki (06:43)
No, those are more

so unlike the projects themselves, right? So if a project is actually happening, right, those are more the indicators, I think, of the volume of projects that are out there. So it’s really not specific to the GCs or subs.

And again, most of that is really related to architectural building index is focused on non residential construction, I believe. But again, it just kind of gives you a better macro level of what’s happening with how many projects are out there, how busy the architects are. the construction connect one is really interesting to me because it has projects that are there but are delayed for whatever reason. For financing, as we talked before, a lot of times there might be

Rishi Srivastava (07:18)
Hmm.

Scott Damiecki (07:22)
a project that’s in the pipeline but because of interest rates it’s on hold potentially because of financing right or you know it gets put on hold because of federal funding or something like that so but again it gives you a good macro level of really what’s happening nationwide.

Rishi Srivastava (07:38)
Looking ahead, if rates ease mid-2026 and public work stays steady, which sectors and delivery models, CMR, design, build, EPC, are best designed to accelerate?

Scott Damiecki (07:50)
Yeah, I think, you know, if you look at kind of the forecast for 2026, right, there’s probably some slow growth happening in 2026 for construction as a whole, right? I think certainly data centers are hot. They’re still going to remain hot. If interest rates come down, they’ll just, there’ll be more of those because the finances will make more sense for some of them that are on the fence right now.

I think we’re institutional and some industrial kind of logistics companies will probably see some uptick as well.

I think the traditional office and retail sectors are still going to have a hard time. There’s probably not going to be a lot of growth, you know, in those sectors. And then as far as, you know, the type of work, you know, I think certainly the construction manager risk and design bill, you know, those opportunities will probably accelerate. I mean, most of that work is in the public sector. They do a lot of construction manager type deals with GMPs, right.

design build is very popular in the data center arena, right? So that will continue to probably be pretty strong.

Rishi Srivastava (08:48)
Yes. enough.

Scott Damiecki (08:51)
And then, you know, the EPC model is typically on very large complex type projects. so those are probably, there’ll probably be more of those. We’re seeing a lot, you know, and right now, even the trend is jobs are a lot larger. They’re major jobs. I look at some of our clients, they’re either doing really big work or really small work. And so that some of that medium sized project has kind of disappeared for whatever reason.

Rishi Srivastava (08:52)
Thank

Scott Damiecki (09:19)
But I think a lot of that has to do with financing. So I think as the financing, the rates come down, be easier to finance. think there’ll be a lot more of those middle tier type construction projects that actually do come online in 26.

Rishi Srivastava (09:35)
Yeah. Could you explain what are the differences and similarity amongst CMAR Design, Build, and EPC?

Scott Damiecki (09:42)
Yeah, so obviously design build is more so like, we want to build this, help us design it and build it at the same time, right? So it’s almost like design as you go, right? Process and a lot of that because it’s just a lot of times it’s efficient because you have the builder involved in the actual design and can work with the architect engineers to actually design things that are effective for the owner.

Rishi Srivastava (09:50)
and

Scott Damiecki (10:05)
So there is a lot more collaboration between who’s actually building it and who’s designing it. So the contractor has a, they might have engineers themselves on staff that can really have a lot more coordination with each other, right? That construction manager at risk.

kind of design is obviously there’s construction management firm that just basically on behalf of the owner runs the project. And so that way the owner doesn’t have to be as involved in the day to day of the project. So you hire a construction manager, but that construction manager in this, you know, at risk is, is a little bit more on the hook for things. They want to keep things, you know, obviously under the GMP that’s set on those projects, but you’ll see that a lot in the, in the public space, right? Cause the construction management

or the owners don’t want anything to do with construction. They just want the building built or the bridge built or whatever it is, right? So they’ll hire a CM to kind of oversee the day-to-day kind of environment.

Rishi Srivastava (10:58)
The next section here, is on labor, operations, and delivery. Labor remains the headline risk. Beyond we need more people, what?

Practical playbook are you seeing from well-run firms to protect margin? Self-Performance, Refab, Compensation, Immigration contingencies.

Scott Damiecki (11:19)
Yeah, I think it’s a multi-pronged approach. Every contractor is a little bit different, but you can see some firms are choosing to self-perform a little bit more of the work rather than subcontract it out. That does two things. You can control, hopefully, the price of it rather than subbing it out and having to pay the subs markup.

And then, you know, in addition, know, you can control your own labor. So if you’re keeping your labor busy, you can keep them on on your staff and not have to worry about losing them as long as they stay busy.

know, prefab has been popular for a long time, but it continues the trend, right? It obviously increases efficiency when you can prefab something. It cuts down on waste of materials. so almost, you know, every client that we touch is trying to do some form of prefab or expanding their prefab process to do more and more of that prefab, because you’re in a controlled environment in your own space rather

than at a job site, it’s much more efficient and costly and you probably, you know, it’s less labor hours as well, right? So you’re cutting down on your labor hours, which is great.

And then I think there’s obviously some compensation is a factor in trying to keep your talent rather than your competitors taking talent from you. So working with HR on compensation plans, incentive plans, bonuses, trying to keep your folks employed with your organization as long as you can.

You know, and there’s obviously a challenge with immigration, right? So the job market is still very tight. And so I think employers need to be.

make sure that they’re conducting some internal audits, potentially of their employees and make sure their I-9 forms are in line with everything. And then also training their folks if there’s a job site, if ICE shows up to your office or shows up to a job site to know, be educated about how to respond in those settings, I think is really important as well. And then some of the best in class are also investing in the next

generation.

Rishi Srivastava (13:22)
Mmm.

Scott Damiecki (13:22)
So they’re getting involved with vocational programs. They’re obviously embracing the apprenticeship programs. They’re out and there’s a lot of organizations. I was part of ACE Mentor Program for a long time and getting kids involved in the trades when they’re in high school, right? And saying, hey, you don’t necessarily need a four-year degree. You could get a really good paying job in the trades.

Rishi Srivastava (13:44)
Yeah.

Scott Damiecki (13:47)
A lot of contractors are getting involved in those initiatives as well.

Rishi Srivastava (13:51)
Yeah, with the AI actually after all the white collar jobs, know, it makes probably more sense to be a blue collar person now.

Scott Damiecki (14:00)
Yeah, there’s some really good paying jobs in the construction space for sure. it and those, there’s a lot more programs available to kids that are in the high school ages as well. So I think that’s starting to come back. You know, it shifted away for a long time and now I think it’s starting to come back.

Rishi Srivastava (14:20)
How are immigration policy shifts actually flowing through to job costing and schedules on the ground? Any regional differences you’re observing?

Scott Damiecki (14:29)
You know, it’s hard to really measure, right? ⁓ Obviously, you look at the news and there’s been some really big enforcement on certain job sites. Obviously, that hinders the schedule of the job pretty substantially when you have to shut the job site down for period of time. know, I think it’s obviously…

the enforcement on immigration is obviously shrinking the pool of available workers. And so gonna put a strain on availability of workers, but also wages are going to increase, right? ⁓ I saw some stat about the DC Metro region that talked about…

Rishi Srivastava (15:01)
Mm-hmm.

Scott Damiecki (15:08)
you know, the policies and the impact on labor costs and potentially raising, you know, costs of up to 12 % on a project because of the increased labor costs. So we’ll see if that actually happens. I just saw that in an article someone did a study. But it’ll be interesting to see what contractors really feel. And then obviously, you know, depending on what region you’re in, right, certain regions are impacted more heavily than others. Obviously the South

Midwest and the West, you know, has large populations of foreign born workers. know, Southeast, you know, as well. Midwest probably doesn’t have as much impact, right, with that’s but and then obviously the Northeast as well has a large fraction of, you know, foreign born populations. So, you know, different regions are going to that differently. And I think that you just have to be kind of be prepared for it.

Rishi Srivastava (15:46)
Mm hmm. .

Scott Damiecki (16:00)
as an employer, looking at your workforce, but also it’s not just your workforce, it’s your competitor’s workforce. you if people start running out of people to hire, they’re gonna start looking at your employees to hire. know, wages are gonna be driven up, right? So that’s the net impact people have to be ready for.

Rishi Srivastava (16:07)
Yeah. Yeah.

Definitely. If a contractor’s wip has looked fine historically, but fee fade is creeping in, where do you start the diagnostic? Estimating discipline, production rates, procurement timing, or change order management?

Scott Damiecki (16:32)
Yeah, when I… You know…

Well, first, I would say, you know, I think some contractors may not be doing this, but I always try to try to preach that, you know, you should be looking at your whip at least monthly. Right. And identifying trends. know, in my experience, the estimating discipline is usually the one that creates these issues. And specifically, you know, it’s really the related to change order management. Right. So ⁓ that’s usually the number one issue that

Rishi Srivastava (16:59)
Thank

Scott Damiecki (17:01)
we see. So it’s important to manage change orders, right? The associated costs of those change orders and the necessary approvals. You know, in our experience, we’ve seen, you know, contractors with a substantial amount of change orders that just keep going, right? They go to the end of the job.

Next thing you know that you’re at the end of the job, you’re settling them for some agreeable and that’s when you start to see fade on some of those projects where, is if you are managing those change orders along the way, making sure you’re getting proper approvals along the project, right? Some of these projects are multiple years.

Rishi Srivastava (17:18)
And you’re

Scott Damiecki (17:34)
you know, you have a lot better chance of keeping up and making sure that those change orders are profitable. And I think it really has to be the culture, right? What we see is like accounting and project management should have a healthy relationship. They should be at they should have open communication with each other and they should be monthly scheduled meetings that they’re interacting. Certainly should be interacting in between those meetings as well. But at least you have scheduled meetings to kind of

go through those things because certainly jobs, you know, on the actual operations side, you certainly have labor production issues.

Right? And obviously timing of materials are always an issue and running the day. But those are really focused on project management. Right? So if your project managers are doing what they’re supposed to be doing, that’s great. And obviously it impacts the profitability of the job. But what we see that causes most of the issues from a FADE perspective is the lack of communication between accounting and project management.

Rishi Srivastava (18:33)
Hmm. Okay.

Scott Damiecki (18:33)
And I think that’s really important just because you could call each other out, you

could work with each other. If there is an issue on the job, let’s put that in the estimate, let’s make sure we’re accounting for it. Let’s not wait, right? So I think a lot of times things get swept under the rug, they don’t come to fruition until the end of the job. And the job was going, it looked like it was going fine, fine, fine, fine, but really it wasn’t. There was really issues, right? And then all of sudden at the end of the job, you have this huge fade.

So it’s really the culture of transparency and let’s address the issues upfront with each other as soon as they arise. Let’s not wait to hope things get better.

Rishi Srivastava (19:11)
Yeah, I mean also I mean maybe project managers are incentivized sometimes to hide things a little bit right

Scott Damiecki (19:20)
That’s true. If they’re incentivized based on profitability and things like that at certain cutoff periods, they may have pressure, in other words, some kind of pressure to do something. And I think that’s why we try to…

Rishi Srivastava (19:20)
and

Scott Damiecki (19:36)
We try to make sure that if you do have incentive programs, especially with project managers, that that’s based on the end result of a job that you can look back to, not at a point in time. So, yeah, that job had a 40 % margin this year. You’re going to get a really nice bonus. And then when the job finishes, it ended up at 10 % margin. You’re kind like, well, what happened? So making sure that that project manager isn’t incentivized to do those things, they’re incentivized based on the end result, which is the

Rishi Srivastava (19:43)
BOOM

Mm-hmm.

Scott Damiecki (20:03)
10 % margin where it ended, that’s their incentive, right? So again, don’t have these arbitrary cutoffs for project managers to be incentivized to have inaccurate reporting is important.

Rishi Srivastava (20:14)
Yeah, yeah.

It’s especially tough on a multi-year jobs, right? I mean, everyone wants their bonus and maybe you need some sort of clawback or clause, you know?

Scott Damiecki (20:18)
Yes.

That’s right. That’s exactly. And again,

that’s why some people structure it is like we’re gonna have, you’re gonna have, it’s great. You’re gonna have some adjustments and things like that, right? It does become a little bit more challenging when, hey, maybe that project manager is no longer employed at this organization, right? And so that’s why we always, our position is more like, hey, let’s not reward people until a job’s done, right?

Rishi Srivastava (20:48)
Yeah

Scott Damiecki (20:49)
and then you could go back and reward them based on the actual result of the job. And it’s a challenge. Everybody has different type incentive plans and bonus arrangements, but you do have to be, you don’t want a project manager to be incentivized to have inaccurate reporting on their job profitability. Like that’s the last thing you want them to be inaccurate, right? So.

Rishi Srivastava (21:06)
Mm-hmm.

No, no. You advise GCs, subs, engineers, and developers. What’s one thing each segment should learn from the others to navigate the next rate or labor cycle better?

Scott Damiecki (21:27)
Yeah, I think the biggest thing that we see in the industry overall is just having a little bit of empathy related to cash flow. ⁓ You know, I think it’s always viewed at least, I have, we have all of those types of clients. And so I hear from different angles, but

Rishi Srivastava (21:37)
you

Right.

Scott Damiecki (21:47)
The subcontractors definitely have a tough position of financing the job. As I spoke earlier, they’re paying their labor weekly, normally, right? And so they have to pay them every week. And then they also have to pay their smaller tier subs as well as their material suppliers. And so if they’re not collecting for 90, 120 days, it’s a huge strain on their balance sheets and in their cash position.

Rishi Srivastava (21:58)
Mm-hmm.

Scott Damiecki (22:16)
potentially they’re using their line of credits to finance those things.

And so I think, you know, the, the, the owners and developers need to realize that, you know, they have to pay the GC and then the GC then has to pay the subs. And it’s, know, it’s this, it’s this waterfall of funds that are going through the process. so the longer it takes, right. The delay between is just kind of exacerbated. So I think there’s should be a little bit more empathy in our industry for, for, you know, the money that needs to flow to all of these lower tiers and especially a lot of subcontractors.

Rishi Srivastava (22:30)
And.

Scott Damiecki (22:49)
that are in the second tier subs. There a lot of small companies that are really dependent on those payments. So, you know, I hope there’s more collaborative approach to payment and collection and owners and GCs, you know, have better understand that. And then, and I would say, you know, from the engineers right there, engineers are really good at…

you

contingency planning, right? Like they design things with maybe the worst case, Worst case, hey, this building can hold this type winds, right? Worst case, here it is. So I think, you know, there’s a lot of construction companies that have more of a risk management plan about their own business. You know, what happens if our supplier goes out of business? What do we do, right? Are we just using one supplier, right? You know, we only have a relationship with one bank. Well, what happens

Rishi Srivastava (23:21)
Thank you. Mm hmm.

Scott Damiecki (23:39)
if something happens with that bank or we’re not in compliant with the covenant. Do we have another option from a financing perspective? So just trying to have a risk management plan for your business the same way an engineer kind of designs a building with risks involved I think is important.

Rishi Srivastava (24:00)
Yeah, you talked about empathy. That’s so important. know, like this, especially the second tier subs. A lot of times these guys are mom and pops. They don’t even have maybe line of credit, man. They’re probably running through their savings account, these businesses.

Scott Damiecki (24:12)
That’s right.

Yeah, that’s right.

Over the years, we’ve worked with a lot of contractors and the owners are putting in their own money.

Rishi Srivastava (24:22)
Mm-hmm.

Scott Damiecki (24:22)
you know,

from prior years, right, maybe earnings and they’re putting money back into the company so that the company can can make payroll. And, you know, I don’t I don’t know if there’s enough appreciation in the industry for that. Right. And the impact that a week delay potentially has on those small businesses. And so, again, I think people need to be aware of that. All the project managers with approvals and, you know, engineers and architects signing off on the monthly.

days, like I think everyone just has to have a better awareness and again, empathy for, you maybe it’s the last person in line that collects their money, right? From the first person, last person, you know, it could be, it could be 30 days difference of when they actually get their money. So ⁓ I think it’s important for everyone to just keep that in mind when they’re making these approvals and things like that. So, and again, it’s challenge at the, I feel for the general contractors as well. It is a challenge.

Rishi Srivastava (25:00)
Mm. Okay.

Scott Damiecki (25:18)
You know, when you get 20 subcontractors submitting invoices and you have to then take that and put it into your invoice and that invoice has to go to the owner or developer. You know, have to make sure you have the proper support for all those 20 subcontractors, right? And so if one decides not to give you all of the accurate information and everything you need to submit to the owner, that causes a delay. And fortunately, it delays the 19 subcontractors that did everything

Rishi Srivastava (25:41)
Mm hmm.

Scott Damiecki (25:45)
right and it doesn’t just penalize the one

subcontracted that didn’t submit what they were supposed to submit. you know, there’s a lot, it’s not that simple, obviously, right? There’s a lot of things involved. There’s a lot of parties involved. And there’s, you know, there’s checks and balances for a reason. And then sometimes I know some of the GCs will actually end up just scoping out that one subcontractor and said, okay, we’re going to deal with you next month because you didn’t do what you’re supposed to do. We’re going to take everybody else, all these 19, we’re going to submit it so they can all get paid. So there are some things that can be done.

Rishi Srivastava (26:02)
.

Scott Damiecki (26:16)
But I wish it was as easy as me saying it because I know it’s a lot more complex in practice. But certainly having the empathy I think helps that process.

Rishi Srivastava (26:24)
Yeah. Next section here is finance, assurance, and risk. Many firms graduate from reviews to audits as they scale or take on new lenders and sureties What triggers that jump and what timeline should CFOs expect to get audit ready without burning out the team?

Scott Damiecki (26:46)
Yeah. So the first part of that, I think there’s a lot of factors, right? Certainly revenue size is one that’s, you know, somewhat good measurement. But there’s a lot of other things. you’re doing significant financing, your company’s growing and you need a lot more borrowing capacity or bonding capacity, right? That’s going to trigger the need for you to jump to a review, to an audit. And a lot of times, you know, it’s the user,

The underwriter or the or the bank that determines that right? So I think you know I always look at it and say hey if you’re you’re doing about 50 million dollars

you know, and you’re up to $50 million, you’re probably doing a reviewed financial statement, and you’re probably pretty good. As you continue to grow, you exceed 50, you probably need, and you continue to grow, you probably start needing to thinking about, okay, we’re probably gonna need an audit at some point, right? But I don’t think there’s really a hard line test of like, well, once you cross this threshold, you’re an audit versus a review, because it’s different if you’re a general contractor or you’re a subcontractor, right? And again, the needs that you have from

a borrowing and a bonding capacity really drive it, right? So what I always tell everyone is, hey, if you’re growing, make sure that you’re communicating with your bank and bonding company, have these discussions saying, hey, we’re doing 50 million this year. Next year, we’re projected to do 60 million, right? What things do we need to consider? What should we be thinking about? I think those are important things. And then

Rishi Srivastava (28:15)
you

Scott Damiecki (28:18)
Audit readiness, I mean, think if you’re having a review and you do need to have stepped up to an audit in the following year, you probably need all year to try to prepare of like, well, what do we have to do now from going from a review to an audit? Because in layman’s terms, I always explain to everybody, said, a review, an audit is probably four to five times the amount of work than a review.

Rishi Srivastava (28:20)
Thank

Mm.

Scott Damiecki (28:40)
And that’s internally and externally. So for us as an auditor,

when I look at hours, it’s probably four or five times the effort of a reviewed financial statement.

And then from an internal perspective, it’s the same because there’s a lot of transactions that have to be, you know, there’s a lot of testing that happens. A review is inquiry and analytics, right? There’s not a lot of testing of transactions and things like that. We will look at things, we’ll ask questions, we’ll get responses. And as long as they’re reasonable, right, we can conclude on accuracy in a review. But in an audit, a lot of testing and there’s definitely a lot of things that

probably internally construction companies aren’t ready for. So if they do need it, should be talking to their CPA early on in that process to be prepared for an audit.

Rishi Srivastava (29:25)
Yeah Seinfeld had said some really bad things about audit you know it’s like a rectal exam

Scott Damiecki (29:32)
Right,

Yeah, audit is sometimes, it’s, they can be painful, right? But I think in terms of, you know, companies being

Rishi Srivastava (29:37)
Mm-hmm.

Scott Damiecki (29:40)
Once companies get into a really good rhythm, it is very systematic, right? There’s not a lot of changes. we’re obviously, you get used to it. So a lot of CFOs that have gone through it before, they know how it goes. But it’s a lot. It’s a lot of time and a lot of effort on both the auditor as well as the internal accounting department.

Rishi Srivastava (30:01)
From your seat, what are the most common audit or EBP audit surprises in construction? And how can finance leaders de-risk them ahead of year end?

Scott Damiecki (30:12)
Yeah, I I always say from an auditor’s perspective on a construction company, Construction revenue recognition and WIP schedule is the number one risk area from when we look at errors or misstatements. And so kind of what I said before, I mean, the biggest issue that we usually see is the disconnect between accounting and project management.

and the lack of communication between the two is usually what causes those errors and it has to do usually with the estimate.

So again, I think having policies in place that you’re having monthly formal meetings between accounting and project management and if you’re you’re large enough you have project accountants that are assigned to projects They should be talking with project managers on a continual basis But I would say it’s always most most of our adjustments when I look at a construction audit They have to do with the wip schedule and the estimate on the job revenue recognition. That’s

the number one I would say. And then, you know, I also do a lot of employee benefit plans or EBP audits. And so, you know, for 401ks and ESOP plans.

And so, you know, on the 401k is we see a lot of just untimely remittance of contributions. you know, employee, you withhold wages from your employee and they say, want to contribute 5 % of my salary to my 401k. Well, the employer is obligated to make that as reasonably possible and contributed to the plan as soon as reasonably possible in the normal course of business. And so sometimes, you know, employers don’t take that as seriously as they should.

Rishi Srivastava (31:36)
Thanks.

And I’m

Scott Damiecki (31:47)
So, you know, there’s corrections that need to be made when you don’t do it timely. So that’s something that we definitely see. And then just from an overall

Rishi Srivastava (31:48)
going to take to thank you for joining us.

Scott Damiecki (31:56)
perspective, you know, some of the smaller employers, I think, don’t have a good enough appreciation for the compliance.

with employee benefit plans. So it’s very compliance driven, right? There’s a RISA, there’s DOL, there’s a lot of regulations that you need to comply with when you have an employee benefit plan, such as a 401k or an ESOP plan. you know, ⁓ it’s very important to take this seriously.

Rishi Srivastava (32:21)
Yeah,

government regulation, so on EBP The next question is surety and banking relationships are pivotal. What traits define a healthy contractor surety bank triangle and

red flags?

cause capacity to tighten.

Scott Damiecki (32:38)
Yeah, I always I always reference the sureties where they have three C’s right that they have character capacity and capital right

And so, you know, character is just really the contractor’s reputation and trustworthiness. Right. And I look at that and to me, it’s about the transparency of communication. No one likes surprises. Right. Especially not banks and charities. So if things are happening that are bad or good or you want to take a distribution from your company, like the communication to me is so critical.

before

you do anything that’s substantial in your business, or if you have a really bad job that you know is going to get worse or is not trending well, think it’s really important to have that transparency and communication with individuals because that’s really the character part of it. And character, think, is really heavily weighted when you have long-term relationships and your bonding and banking relationships. And then obviously, to me, the character is

super important. Obviously, the capacity is the ability for the company to perform the work. that they have the labor, you know, and to actually, and the experience to actually do a project. So that’s obviously important. And then capital is their financial strength, right? So normally, what we see is, is just the relationship. they, lot of times the bank and the money company can kind of work through you, work with you to get through some tough times, right? But they, it’s really all three of those.

Rishi Srivastava (34:07)
other

Scott Damiecki (34:09)
right? So if you’re not transparent, you’re not communicating issues to them, there’s a lack of trust that occurs.

And then all of sudden, right, they’re not going to give you the bonding or borrowing capacity that you need to run your business. So I think that’s always the most important thing for us. And then obviously, you have to have balance sheet strength. And as I said, with a distribution, a lot of our companies are S corporations or LLCs, and they’re taking distributions out of the company. The owners are taking distributions.

You you have to maintain a certain level of capital in your business to be able to get you the borrowing and bonding capacity that you need. So communication of, you we had a really good year, you know, maybe, maybe, maybe, you know,

Rishi Srivastava (34:41)
.

Scott Damiecki (34:52)
what’s our capital need to be to maintain a solid relationship, right? I want to take some money out of the business. You have to have that communication because, you know, I’ve heard stories of clients, you know, or not clients, but businesses, construction companies.

having a good year and then they take all the money out in a distribution. And so then the balance sheet isn’t in a better position than it was before, right? And so it can end up really hurting you if you’re not having that communication.

Rishi Srivastava (35:18)
Teams evaluating AP automation what controls and audit trail capabilities matter most so auditors, sureties and lenders stay comfortable.

Scott Damiecki (35:29)
Yeah, I know from our perspective, right, in an auditor we’re looking at internal controls, right? Segregation of duties is such an important thing in the accounting department.

So it’s like making sure that any system you implement, you know, it has, it has the who, the what, the when and the where, right? It is far as logs and you can go back and you say who entered it, right? What did they enter? When did they do it? Right. And where did they put it? So for us, I’m just on the AP side, it’s, it’s obviously the accuracy of the data is extremely important with, with tools. And then we, you know, the, necessary approvals to get those in,

is paid, is obviously also very important. So those are the, I know some of the things that we come in and we test things. We get an invoice, we want to make sure the amount is right, it’s in the right period, right? It went to the right job and it was approved by the right, you know, project manager or whoever is supposed to approve the invoice for payment.

So those are kind of the things that we look at them to make sure that that you know things are accurate and there’s a segregation of Who’s entering it who’s approving it who’s paying it? So so someone’s not doing something they shouldn’t be doing

Rishi Srivastava (36:35)
Yeah, so we are in the AP automation business. There was a story that happened yesterday.

you know, one of our customers ended up, ⁓ short paying their vendors and somewhere in the approval process, turned out that one of the persons changed the amount to a lower value, you know, and the one, and it was there in the logs. So the customers comes back to us and says, like, is the system right or not? You know, that the challenging the system, but I mean that those logs, you know, that

Scott Damiecki (36:53)
Hmm

Right.

Rishi Srivastava (37:05)
the approvals,

Scott Damiecki (37:09)
Nobody looks at him, Yeah, I

100 % well, we it was interesting. I was talking to one of our partners in our cybersecurity practice and he had a similar story that you know, someone approved. I think it was a wire transfer or something of that sort and they it was almost like a log but he went he he was able to access the laptop and see the history of

you know, activity of the data on the banking website and the approvals and you could see who did it. You could see who was logged in. You could see who the person was and the very similar, like you could log and say, well, you you did this. You were the one that did it. So it becomes really important to have that data. And then, you know, in some of these, it’s just that sometimes you have to go back to, who should have approval to change invoices, right?

but not everybody should have the rights to maybe go in and short pay or change amounts of invoices. But it’s important to have that logging because at least you can go back and correct any issues that you may have.

Rishi Srivastava (38:00)
Thank

Yeah

and sometimes it’s not even about people being unethical it could be a genuine mistake too you know. ⁓

Scott Damiecki (38:17)
That’s right. That’s right.

Absolutely. Yep.

Rishi Srivastava (38:20)
So the next section here is on technology governance and professional practice AI and automation. Where is it actually helping contractors today and where it is still over promised and under delivered?

Scott Damiecki (38:34)
Well, you know, we just touched on AP automation. Obviously, think that I think AP automation is probably, you know, one of the leading AI technologies, you know, in the construction space, right? And again, construction has always been has a history of slow technology adoption, right? I think everyone knows that that’s in the construction space. So I still there’s definitely some more work to do and improvement, I think, that needs to be done.

I feel like,

There’s certainly an overload of companies out there that have solutions, but I feel like there’s a lot of improvements still to be made, I think, in the data intensive tasks. Because again, what’s a construction company? They’re day to day, AP is a large part of it. They have a lot of invoice processing that can certainly be more efficient. And obviously, Rishi, your company can help with that. I think there’s a lot of things on the WIP schedule, too. The WIP schedule is really the backbone

of a construction company. And I think we have so many spreadsheets.

Right? Spreadsheets, endless spreadsheets, I think, in the construction industry. And so something that’s a little bit more forward-looking or help forecasting a WIP schedule, right? I think that, to me, is where there could really be some beneficial use of AI. And I don’t know if we’re totally there yet. I know there are some companies that are working on that and look at the WIP. But I think that could be tremendous opportunity, I think.

in our industry to gain some benefits from AI and automation.

Rishi Srivastava (40:02)
Yeah,

and web is definitely a tough one to automate for the complexity is just tremendous. What do you think about the cache flow forecasting? Do you think that can be automated with AI? Or maybe not.

Scott Damiecki (40:15)
Yeah, I think it’s you could try. I mean, I think that the biggest thing and and I think I was thinking about this earlier too, but like the cash flow is so important to a construction business. And I think you could try to automate that because you could look at the trends of maybe particular GCs or particular jobs and what is the trend that they’re paying, right? So if you have your accounts receivable,

you may be able to, AI may be able to help you say, based on historical trends, this is when you’re gonna collect.

Rishi Srivastava (40:47)
Burn.

Scott Damiecki (40:47)
Right.

And they could probably start to start to forecast your collections. Right. Then if you’re in obviously collections, usually contractors are using collections before they’re making payment to other subs and material suppliers sometimes related to a particular project. But they still have to pay their labor, as I as I talked about earlier. So I could probably help with that because that every job is a little bit unique. But if you have a trend of a particular GC combined with the job

Rishi Srivastava (40:52)
and

Scott Damiecki (41:16)
that you’re working on for that GC, there probably is a trend of when you’re getting paid. So AI can probably do a little bit of predictive analytics there.

Rishi Srivastava (41:24)
Yeah.

Mm hmm. Fact adoption pitfalls. What patterns have burned contractors, tools for all of weak data governance or automating broken processes.

Scott Damiecki (41:36)
Yeah, I think the sprawl is such a hard thing because there’s so many tools, there’s so many solutions, there’s so many different providers, and I think the risk is you have this information or data in a silo, and it’s not communicating with your other systems.

Right. And I think that’s so critical for the, for the systems to be able to communicate with each other and share the data. Um, you know, I’ve seen, think I’ve seen that in the past, right. Contractors implement, you know, some new, new software or new project management software or whatever it is, but it doesn’t communicate to their ERP. Right. It’s a manual. makes another manual process to make sure that the data is flowing from one to the other. And I think that.

to me is the biggest pitfall in certainly the construction space. There’s a lot of these, you know, call them bolt-on, right, tools, but the lack of communication and the integration between them I think has always been the challenge.

Rishi Srivastava (42:37)
Yeah, data flows seamlessly among systems is so important. From your CFMA and industry work, what two practical initiatives should firms push in 2026 to raise financial discipline across the industry?

Scott Damiecki (42:42)
Yep.

Yeah, and while you mentioned CFMA, I’ll give CFMA a shout out. Obviously, there’s probably a lot of members that listen to your podcast. I know we’re both involved. The CFMA, great organization for the industry and education. And I’m happy to serve on the executive committee for CFMA National, but ⁓ a great organization. So a little plug there for CFMA.

Yeah, think, you know, just leveraging AI and technology, Like I said before, there’s so many spreadsheets. People have gotten so comfortable with their spreadsheets. You know, they’ve been working on these same spreadsheets for 20 years.

Rishi Srivastava (43:27)
Hehehe

Scott Damiecki (43:27)
And somehow we have to figure out how to move beyond that as an industry. I’m also probably in that category. I have certain spreadsheets that I love and I use. a lot of our clients are giving us spreadsheets. So I think using dashboards and technology to analyze data, as I said before, if there’s better solutions to analyze your WIP and help you with forecasting.

I think, you know, obviously in cashflow management, I has always been king, cash will always be king. And so if you, to your point, if you can use some kind of AI tool to help you manage cashflow, project cashflow, you know, that would be great. You know, we’ve already seen, you know, as interest rates, you know, were rising.

I think interest rates were at historically lows, obviously, before they started rising and before inflationary periods and all those things. cash wasn’t that tight, right? Everyone was in a good cash position. People were paying people very timely. Now that’s changed, right? Interest rates have gone up. You can earn money by having your cash in the bank.

Rishi Srivastava (44:27)
Mm-hmm.

Scott Damiecki (44:27)
And that could be substantial. And so now everyone’s kind of back to, well, I’m going to play the float and I’m going to earn some interest before I’m not going to pay earlier than I need to pay. And maybe the discount for early pay isn’t worth it anymore. And so there’s a lot of different factors, but I always think cash flow management is so important.

for the construction industry that people really need to, they should really be looking at cashflow management really, really strongly. And again, you don’t know where the economy is going to go, but construction is always a little bit of a roller coaster, right? You got some really good highs and then you got to deal with the lows and how do you weather that storm to get through those lows so that you can ride the roller coaster up back to the highs.

Rishi Srivastava (44:46)
you

Scott Damiecki (45:12)
I think that’s really important.

Rishi Srivastava (45:14)
Yeah, ethics and competition. What’s your advice to finance leaders on staying respectful and maintaining integrity under bid pressure and budget overruns?

Scott Damiecki (45:26)
Yeah, think leading by example is just so critical, I think it starts at the top, the tone at the top, right? It’s all the things you’ve heard before. But as I was mentioning earlier, the open communication between your teams is so important between project management and accounting and the C-suite.

And I think just ⁓ making sure that that approach is consistent with what you’ve always done. Don’t treat a bad job and a good job differently. You should be treating them the same. You should admit mistakes. You should reward honesty. The tough part is we’re all human, and no one likes to be the bearer of bad news. But when jobs start to slip,

I think it’s really important to make sure that that communication is occurring because a lot of times other people can step in and help you. There’s too many times I think, you know, you see jobs and there’s a problem and they try to sweep it under the rug. But usually a job with problems usually gets worse. It usually snowballs. And so it always, it always comes to the surface, right? And so, you know, it’s kind of like that iceberg.

Rishi Srivastava (46:27)
Yeah ⁓

Mm-hmm.

Scott Damiecki (46:31)
There’s

a lot more of the iceberg underneath that water than above it. But when you see an iceberg, gotta start, you know, know there’s trouble. But before you see the iceberg is when people try to cover it up and you have to, you know, gotta deal with it up front.

Rishi Srivastava (46:35)
and

The last section here is on &A, capital, and case studies. Investor interest is strong but mixed in labor intensive trades, for example, landscaping, roofing. What operational KPIs help acquirers get comfortable in 2025?

Scott Damiecki (47:02)
Yeah, I mean, I think in the MA market, the EBITDA is such an important metric that everyone looks at from a value of the business, right? It’s a multiple of EBITDA. And so I think that’s always been looked at very hard. But I would also say that, you know, your gross margins, you know, if you have different service lines, different revenue streams, you know, looking at those gross margins and seeing the consistency of them.

I think it becomes very important to have forecasts and comparing forecasts to actual performance and how those line up and have some historical trends of those that you know you’re able to hit your budgets.

And then probably on the labor side, there’s definitely labor efficiency metrics that I think are important. And then also ⁓ labor turnover, because if you have a high level of turnover, obviously you have to continue to replace your workforce and you have less experienced people. And so I think those are some important metrics. ⁓

Rishi Srivastava (47:58)
suddenly.

Scott Damiecki (48:00)
you know, things to keep in mind. But, but yeah, I always, I always kind

of those type topics. I always look at my transaction advisory practice folks in the firm and they have a lot of good insights. They helped actually help with the due diligence on Ida and sell side. So those guys do that stuff every day.

Rishi Srivastava (48:13)
Hmm.

You’re not part of that side of business, isn’t it?

Scott Damiecki (48:20)
That’s not what I do every

day. I I oversee the construction practice and some of those folks obviously work in the construction space, but on an everyday basis, I’m a financial statement auditor and that’s what I do with my clients.

Rishi Srivastava (48:32)
For owners considering a sale in the next 12 to 24 months, what three fixed first items most improve quality of earnings and due diligence outcomes?

Scott Damiecki (48:42)
Yeah, I think the whip schedule is so important. What we’ve actually seen, especially in our transaction space, is a lot of companies that are getting acquired are a little bit smaller, less sophisticated. And so some of them actually aren’t even doing a whip schedule or percentage of completion. nobody in our CFMA audience that’s listening, or that’ll listen to this, but certainly there is.

know, contractors out there that aren’t doing percentage of completion. And so, you know, it’s extremely important to make sure that, you know, you’re in compliance with GAP and you’re using percentage of completion. Because if you aren’t, you’re not going to be coming out on the better end of that transaction. And I also think, you know, you should have reliable.

You should have reliable CPA doing review or all ready financial statements for you. Because when that due diligence comes in, they’re going to try to normalize your EBITDA calculation. And so they’re going to look at how you recognize revenue.

Right. And then they’re also going to try to pull out non-recurring items, either income or expenses. But a lot of these smaller businesses also run a lot of personal expenses to the business. you know, there’s the owner’s personal expenses and, you don’t want to have any of that in your books if you can avoid it. So just kind of cleaning up things, making sure it’s business only and things like that’s important. But I can’t tell you the number of times I’ve heard, you know, companies aren’t using percentage completion, they’re not doing the WIP schedule properly.

those are adjustments to your eBit account. So keep that in mind.

Rishi Srivastava (50:06)
Yeah,

was it is a complete governance so important a case study. Could you share a recent engagement where cash flow or risk tightened fast?

What levers did the CFO pull and how did it end?

Scott Damiecki (50:21)
Yeah, my favorite actually is one that they did before anything bad happened, right? ⁓ So, and I try to tell clients this, you know, everybody has a line of credit. Traditionally, most companies have a line of credit. But when you don’t need your line of credit, it’s usually the best time your position to go ask for a larger line of credit.

Rishi Srivastava (50:28)
Mmm.

Mm-hmm.

Scott Damiecki (50:43)
Right? So you’re doing really well, you’re not using your line of credit, you’re very profitable, your balance sheet is really strong. Go ask. Go ask for more line of credit. Right? Try to double it if you can. Right? See what happens. Ask for more line of credit. Because when you need it, you’re not going to be able to get it.

So the best story was that I had a client that went out, got a huge line of credit when things were good. They came upon tough times. They had the line of credit available to use. They weathered the storm, got through the storm, and got back into good times. So I think that’s my favorite, my favorite that I always try to share with clients of saying ask it when you don’t need it.

Rishi Srivastava (51:22)
Yeah, when you desperately need it, people are not going to give it to you. So the last question is a set of questions actually. It’s a rapid fire round. What metric you wish every contractor reviewed weekly?

Scott Damiecki (51:25)
That’s right. That’s right.

Yeah, cash position, I think is so important. And if I were to add to that, I’d say, you your AR report and status of collections.

Rishi Srivastava (51:44)
One habit elite CFOs have that average teams don’t.

Scott Damiecki (51:48)
open communication and good relationships with the CEO as well as the operations team.

Rishi Srivastava (51:54)
one technology you are bullish on for 2026.

Scott Damiecki (51:57)
Yeah, I mean, I’m not a tech guy necessarily, but I think all things AI, we should try to embrace and see what we can automate. As we were talking about before, you know, the whip schedule automation and AP automation are certainly things that contractors should be looking at.

Rishi Srivastava (52:12)
And very last one is one M &A misconception you’d burst for owners today.

Scott Damiecki (52:18)
Your multiple is not the same as your buddy that sold his business or the business across the street. Your business is not the same as theirs. So do not try to, know, don’t think your multiple is the same.

Rishi Srivastava (52:32)
Scott, thank you so much for your time.

Scott Damiecki (52:34)
Absolutely, great to be here, Rishi. I appreciate you having me.

Rishi Srivastava (52:37)
Thanks for listening to Finance at the Job Site. If you found today’s conversation valuable, share it with a teammate and subscribe so you don’t miss the next episode. You can listen on Spotify or watch on YouTube. Just search Finance at the Job Site. Until next time, here’s to building smarter, faster, and more profitable projects.