Building on Solid Financials – Essential Accounting Advice for Construction Professionals in Kenya

A Guide for Contractors, Architects, Quantity Surveyors, Engineers, Developers & Project Managers

The Financial Complexity of Construction Accounting

“Profit on paper doesn’t always mean cash in the bank — especially in construction.”

This is a truth that veteran Kenyan contractors, architects, quantity surveyors (QS), property developers, and project managers learn the hard way. 

If you’ve spent any time on a Kenyan building site, in an architect’s studio, or managing a multi-phase development from Westlands to Eldoret, you already know this truth instinctively. Construction is one of the most financially complex industries in the world — and in Kenya, it’s also one of the fastest-growing. That combination means getting your accounting right is not just a matter of good business practice, but a genuine competitive advantage.

The numbers paint a compelling picture of where this industry is headed:

• Kenya’s construction market is projected to grow 7.5% annually to reach Ksh 1.02 trillion in 2026, with the sector having recorded a CAGR of 11.2% between 2020 and 2024, and forecast to maintain a CAGR of 6.4% through 2029, reaching approximately Ksh 1.41 trillion by the end of the decade.
• On the ground, this momentum is already visible: construction sector activity expanded 5.7% in Q2 2025 (a sharp reversal from the 3.7% contraction in the same period a year earlier) with cement consumption surging nearly 24% and iron and steel imports more than doubling year-on-year.
• Behind this growth sits a pipeline of transformational government projects: President Ruto has announced plans to invest Ksh 4.6 trillion in national infrastructure over the next decade, alongside a Ksh 1.7 trillion programme to construct 50 mega dams across the country.
• And the sector is a meaningful employer: according to the Kenya Economic Survey 2025, the construction industry created over 223,000 new jobs in 2024 alone.

Yet here is the paradox that every experienced Kenyan contractor, architect, quantity surveyor, developer, and project manager learns eventually: a booming industry does not guarantee profitable businesses. Projects win, sites activate, teams mobilise — and then the cash flow gaps appear, the KRA deadlines arrive, and the retention funds sit locked in a client’s account for twelve months after handover.

Why is Accounting in Construction Fundamentally Different from Other Businesses?

Construction accounting is not like standard bookkeeping. A hardware shop records a sale and collects cash the same day. A construction professional, on the other hand, may mobilise teams in January, complete works in October, and receive final payment (minus retentions) twelve months later. That cycle creates a financial management challenge that is unique to this industry.

Construction accounting in Kenya must grapple with several realities simultaneously: 

• Long project timelines: Projects can run for months or years, but expenses start immediately.
• Multiple cost layers: Labour, materials, subcontractors, logistics—all moving at different times.
• Fluctuating material costs: Steel, cement, and imports can shift pricing mid-project.
• Revenue timing challenges: Payments depend on certificates, milestones, or approvals—not fixed schedules.
• Cash flow unpredictability: Even approved payments can delay.

This article is written specifically for the professionals who live inside that challenge daily: contractors managing civil and structural works, architects billing design and supervision fees across multi-year commissions, quantity surveyors navigating interim certificates and final accounts, property developers overseeing complex multi-phase projects, and project managers responsible for budgets, programmes, and stakeholder confidence. 

Whether you run a sole proprietorship registered on iTax, a mid-sized limited company, or a professional practice, the accounting principles covered here will help you stay profitable, liquid, and fully compliant with Kenya’s tax obligations.

Project-Based Accounting: Managing Multiple Sites Simultaneously

One of the defining features of construction accounting (and the reason it is so complex) is that most professionals in this sector run several projects concurrently, each at a different stage of completion, each with its own budget, contract terms, client, and cash flow timeline.

Managing this complexity requires a clear project-based accounting structure. Each project should have its own cost code or project number in your accounting system, enabling you to produce a project profit and loss statement at any point. This is not just good accounting practice — it is essential data for bidding future projects accurately.

For Contractors and Developers

Maintain separate cost ledgers for each site, covering materials, labour, plant, and subcontractor payments. Reconcile physical progress (as measured on site) against your financial progress (costs incurred) monthly to identify cost variances early. Use the KNBS CIPI indices (explained below) as your benchmark for material cost escalation.

For Architects and Quantity Surveyors in Practice

Track fee income per commission against staff time costs. A commission that generates Ksh 800,000 in fees but consumes 400 professional hours at an effective rate of Ksh 3,500 per hour has cost you Ksh 1.4 million to deliver — a significant loss. Without project-level time and cost accounting, this loss is invisible until it drains your practice’s overall profitability.

Revenue Recognition: Applying the Percentage of Completion Method

For standard businesses, revenue recognition is straightforward: you sell a product, you record the income. For construction professionals in Kenya, a wait-and-see approach to revenue recognition can lead to years of apparent losses followed by a sudden, large profit upon completion. This distorts your financial statements, thus complicating your tax planning, and giving your bank or investors an inaccurate picture of your business.

ICPAK, Kenya’s statutory accounting body, has adopted IFRS 15 (Revenue from Contracts with Customers) as the applicable standard. For construction contracts, IFRS 15 prescribes the Percentage of Completion (POC) method.

How the POC Method Works

Under the POC method, you recognise revenue in proportion to the progress of the contract at the end of each accounting period. Progress can be measured in two main ways:

• Input method: costs incurred to date as a proportion of total estimated costs: if you have spent Ksh 4 million of a Ksh 10 million estimated cost, you are 40% complete.
• Output method: physical milestones certified or completed: if an independent QS has certified 3 of 7 defined stages, you are approximately 43% (3÷7) complete.

Worked Example:An architectural firm is engaged on a three-year commercial development with a total design fee of Ksh 12 million. At the end of Year 1, the client’s QS certifies that design development is 35% complete. The firm should recognise Ksh 4.2 million (35% × Ksh 12 million) as revenue for Year 1 — regardless of how much has actually been invoiced or received. The remaining Ksh 7.8 million is deferred to future periods.

This approach ensures that your income tax liability under the Income Tax Act is spread proportionately over the project duration, therefore preventing a large, unexpected tax bill in the year the project completes.

Job Costing: Know Your Profit Per Project

Most Kenyan contractors who struggle financially are not struggling because they lack work, but because they do not know their true cost per project. Lumping all project revenues and expenses into a single set of accounts is one of the most damaging accounting habits in the construction industry.

Job costing is the practice of assigning every cost and every shilling of revenue to the specific project that generated it. When done well, it tells you at any point in time whether Project A is profitable and Project B is bleeding cash, so you can make real-time management decisions rather than discovering the problem after the final account is settled.

Breaking Down Project Costs

Every construction project has four primary cost categories that must be tracked separately:

• Direct Labour: wages, casual labour, NSSF and SHIF contributions for workers on site
• Materials: concrete, steel, timber, finishes, and all site consumables, tracked against BoQ allowances
• Plant and Equipment: hire costs, fuel, maintenance, and depreciation on owned plant
• Overhead Allocation: a fair share of head office costs (rent, staff salaries, professional subscriptions) apportioned to the project using a consistent method

For quantity surveyors and architects in private practice, job costing means tracking staff time per commission: understanding how many partner hours, technician hours, and administrative hours went into each project, and whether the fee paid adequately covered that input.

Real-Time Tracking vs Post-Project Analysis

Post-project cost reviews are better than nothing, but they arrive too late to change outcomes. The gold standard for construction accounting in Kenya is real-time cost tracking: capturing site timesheets weekly, reconciling material deliveries against GRNs, and comparing actual spend to budget monthly.

This gives you the early warning to cut costs, renegotiate with subcontractors, or adjust your site programme before losses compound.

💡  Practical Tip: Use KNBS Construction Input Price Indices (CIPI) The Kenya National Bureau of Statistics publishes quarterly Construction Input Price Indices covering cement, steel bars, timber, sand, ballast, and skilled and unskilled labour. Referencing these indices in your cost plans and contract escalation clauses protects your margins against material price inflation — a major risk on multi-year projects.

Accounting for Retentions and the Defects Liability Period

Retentions deserve their own section because they are so widely misunderstood and misrecorded in Kenya’s construction industry. Let us be clear on the accounting treatment:

• A retention withheld by the client is not a discount on your invoice. It is not a cost. It is a receivable — money that belongs to you and will be paid in the future.
• Half of the retention (typically) is released upon practical completion. The remaining half is released at the end of the Defects Liability Period, which commonly runs for six to twelve months after handover.
• On your balance sheet, the portion due within twelve months sits as a Current Asset. The portion due after twelve months sits as a Non-Current Asset.

Your accounting software must have a dedicated retention schedule — ideally per contract — that tracks the total retention withheld to date, the date of practical completion, the DLP expiry date, and the date of each retention release.

Without this record, you risk the very real scenario of completing a project, handing over the keys, and then forgetting to invoice for your retention once the DLP expires.

⚠️  A Common Mistake to Avoid: Never write off or ignore unclaimed retentions. Under Kenya’s Limitation of Actions Act, your right to claim a contractual debt can expire. If your retention release date has passed and the client has not paid, issue a formal demand immediately and, if necessary, escalate through the NCA disputes mechanism or the courts.

Mastering Cash Flow: The Lifeline of Every Construction Business

Ask any Kenyan contractor what keeps them up at night and the answer is rarely the technical challenge of building — it is cash flow. The construction industry’s payment structure, particularly on government and institutional projects, creates a persistent mismatch between when costs are incurred and when money is received.

Progress Billing and Milestone Payments

On most Kenyan construction projects, payment is tied either to progress certificates — issued monthly or at agreed stages — or to defined milestones such as substructure completion, roofing, or handover. Each model has implications for your books. With milestone payments, a contractor may carry significant costs for weeks before any revenue is recognised. Your accounting system must track accrued costs against each milestone so that you can project your cash position accurately.

For architects, quantity surveyors, and project managers whose fee schedules are typically tied to BORAQS fee schedules or professional association scales and linked to project stages, the same principle applies: match your revenue recognition to the stage of service delivered, not merely to when the invoice was sent.

Retainage: The Silent Liquidity Killer

Retainage — commonly called a retention — is a percentage of each certified payment withheld by the client until practical completion and, in many cases, until the end of the Defects Liability Period (DLP) which typically lasts 12 months. In Kenya’s construction market, retention rates typically run between 5% and 10% of each interim certificate.

Consider this example:A contractor with Ksh 50 million in certified works and a 10% retention will have Ksh 5 million of earned income sitting in the client’s account — unavailable for wages, materials, or statutory deductions. Multiplied across several concurrent projects, this becomes a structurally significant liquidity gap.

The accounting discipline here is twofold: record retentions as a current or non-current receivable (not as lost income), and maintain a retention schedule so that release dates after the DLP are actively tracked and invoiced promptly. Many construction businesses lose thousands of shillings simply because they forget to invoice for retention release.

Managing Delayed Payments from Clients

Late payment is endemic in Kenya’s construction sector, particularly on public projects. The practical accounting response includes:

• Issuing interim valuations and invoices promptly upon certification. Do not let administrative delays compound cash pressure
• Maintaining a rolling 13-week cash flow forecast, updated weekly, so you can anticipate shortfalls before they become crises
• Front-loading your preliminary and general (P&G) costs in your bill of quantities — ethically and transparently — to improve early cash receipts on long projects

Practical Cash Flow Strategies That Work

Here’s how to strengthen your construction cash flow management in Kenya:

1. Tighten Your Billing Process:Submit valuations immediately after milestones and avoid internal delays on documentation

2. Follow Up Consistently:Do not assume finance teams are processing payments. It is up to you to build a structured follow-up routine so that you get paid in a timely manner.

3. Negotiate Better Payment Terms (Upfront): Where possible, request mobilisation fees, shorten payment cycles and cap retention percentages early in the project lifetime to prevent future cash crunches.

4. Plan for Retention Gaps:Retention is not accessible cash. Treat it separately in your planning.

5. Maintain a Working Capital Buffer:Many professionals underestimate how long payments take in Kenya. A buffer of even 2–3 months can stabilize operations significantly.

Tax Obligations for Construction Professionals in Kenya

Kenyan construction professionals operate within a multi-layered tax environment administered by the Kenya Revenue Authority (KRA). Understanding and meeting these obligations is not optional — non-compliance attracts penalties, interest, and in serious cases, prosecution. Below is a structured overview of the key taxes affecting the sector.

1. Corporate Income Tax

As most construction companies and practices are registered businesses, profits arising from construction activities are subject to corporate income tax under the Income Tax Act (Cap 470). The applicable rates are:

Entity Type	Tax Rate	Notes
Resident company	30%	Of taxable profit
Non-resident company	37.5%	Of taxable profit attributable to Kenya

Taxable profit is computed after deducting all allowable business expenses. The discipline is in ensuring that every legitimate deduction — professional fees, site costs, depreciation on owned plant — is properly documented and claimed.

Please Note: KRA’s audit focus in the construction sector frequently targets contractors who understate revenues from cash-based subcontracting arrangements.

2. VAT

If your annual taxable turnover exceeds Ksh 5 million, you are required to register for Value Added Tax (VAT) with KRA and file monthly returns. For most active contractors, architects, and developers in Kenya, VAT registration is mandatory.

The mechanics of construction VAT require careful management:

• Output VAT: charged at 16% on your invoices to clients for taxable supplies of construction services
• Input VAT: paid on your purchases of materials, plant hire, and professional services, which you can reclaim against your output VAT liability
• Zero-rated supplies: certain government housing schemes and donor-funded infrastructure projects may qualify for zero-rating. Always verify the specific legal basis before applying a zero rate

Monthly VAT returns are due on or before the 20th of the following month. A common and costly mistake among Kenyan contractors is failing to file during quiet periods when no invoices have been issued. Even a nil return must be filed on time as failure attracts a penalty of Ksh 10,000 or 5% of the tax due, whichever is higher.

Experienced contractors file their returns showing only input VAT during such periods, often generating a refund position.

📋  VAT Record-Keeping Requirements All VAT records such as purchase invoices, sales invoices, credit notes, and import documents must be maintained for a minimum of five years. With KRA’s roll-out of eTIMS (Electronic Tax Invoice Management System), all taxable supplies must now be supported by a KRA-validated electronic tax invoice. Paper-only invoicing is no longer compliant.

UNDERSTANDING VAT: The Ultimate Guide to VAT Regulations in Kenya

3. Withholding Tax

Withholding Tax (WHT) is one of the most frequently mishandled tax obligations in Kenya’s construction industry. It is a tax collected at source — meaning the party making a payment to a contractor or professional is legally obligated to deduct WHT before remitting the balance. The payer must then remit the withheld amount to KRA by the 20th of the following month.

Payment Type	Resident Rate	Non-Resident Rate
Building, civil & engineering contracts	3%	20%
Management / Professional fees	5%	20%
Consultancy fees (architects, QS, engineers)	5%	20%
Rental of equipment / plant	Nil (if resident)	15%

When you receive a payment net of WHT, you should obtain a WHT certificate. This certificate can be used to credit against your annual tax liability. Think of WHT as a pre-payment of your annual tax obligation. At the end of the financial year, you reconcile your WHT certificates with your payable tax, and thus deduct WHT already paid from the total tax amount before making payment. 

4. Payroll Tax (PAYE) and Workforce Classification

Construction sites in Kenya typically involve a mixed workforce: permanent employees on payroll, skilled tradespeople on fixed-term contracts, and casual labourers engaged daily or weekly. Getting the classification right is critical because the tax treatment differs significantly.

• Permanent employees are subject to PAYE, deducted monthly and remitted to KRA by the 9th of the following month as well as NSSF, SHIF, and Affordable Housing Levy.
• Contract workers (engaged on a defined-term employment contract) are also subject to PAYE
• Independent contractors and subcontractors: payments attract 5% WHT (for residents), not PAYE

Beyond PAYE, Kenyan construction employers must manage several payroll levies:

• NSSF contributions: A minimum of Ksh 480 per employee matched by the employer per month
• SHIF / Social Health Insurance (SHA): contributions based on gross salary bands starting at Ksh 300/employee
• Affordable Housing Levy: 1.5% of gross income, matched by a 1.5% employer contribution, remitted monthly via iTax
• NITA Levy: Ksh 50 per employee per month

⚠️  Do Not Misclassify Workers. Some contractors attempt to classify permanent site employees as independent subcontractors to avoid PAYE and employer levies. KRA has increasingly scrutinized this practice during audits of construction firms. The risk of back taxes, penalties, and interest on the reclassified amounts far outweighs any short-term savings.

Tax Planning Strategies for Kenya’s Construction Professionals

Tax compliance and tax planning are different disciplines. Compliance is about meeting your legal obligations accurately and on time. Tax planning is about structuring your affairs (within the law) to manage your tax burden efficiently. Every construction professional in Kenya should be doing both.

Deductible Expenses You Should Not Miss

• Professional indemnity insurance premiums — fully deductible as a business expense
• NCA registration fees and annual practising licence fees
• Professional association membership (AAK, BORAQS, IEK, KISM) — deductible where incurred wholly for business purposes
• Site safety equipment, protective clothing, and signage
• Staff training costs — and these also qualify for the NITA levy offset
• Interest on business loans used to finance working capital or plant acquisition
• Losses on bad debts — once written off after exhausting recovery efforts

Capital Allowances on Plant and Machinery

When you purchase or finance construction machinery like excavators, concrete mixers, scaffolding systems, generators, you cannot recognize the full purchase cost in the year of acquisition for income tax purposes. Instead, the Income Tax Act provides for Investment Deduction Allowances (IDA) and Wear and Tear Allowances (WTA) at prescribed rates. Work with your accountant to ensure you are claiming the maximum allowable capital deductions each year, as these can significantly reduce your taxable income.

Timing Your Income and Expenditure

Particularly for professionals who operate on an accruals basis, there is legitimate planning available around the timing of income recognition and expenditure. Procuring materials, renewing subscriptions, or pre-paying certain overheads before your year-end can bring allowable deductions into the current tax year. Similarly, where your project pipeline gives you flexibility on billing dates, timing your invoicing thoughtfully (in consultation with your accountant) can smooth your tax liability across years.

Engage Your Accountant Early, Not at Year-End

Perhaps the single most impactful tax planning strategy for any Kenyan construction professional is engaging a CPA Kenya-registered accountant not in April when your returns are due, but in July when your financial year begins. Early engagement allows your accountant to monitor your tax position quarterly, advise on structuring decisions (such as whether to hold a plant in a separate entity), and ensure you are making provisional tax payments that accurately reflect your liability — avoiding the cash shock of a large final payment in April.

Regulatory Levies and Insurance Obligations

Beyond the mainstream tax system, Kenya’s construction sector carries a set of industry-specific levies and insurance obligations that must be factored into your project pricing and financial planning from the outset — not absorbed as surprises during execution.

National Construction Authority (NCA) Levy

For construction projects valued above Ksh 5 million, the National Construction Authority Act requires the payment of a construction levy equivalent to 0.5% of the contract value. While this levy is typically charged to the developer or project owner, it is often included within the contractor’s scope and flows through the project’s financial management. Ensure your contract clearly defines who bears this cost, and account for it explicitly in your project budget.

NCA registration itself is also mandatory for all contractors and consultants working on Kenyan construction projects. The annual registration and renewal fees are a legitimate business overhead that should appear in your accounts — and your tenders.

Professional Indemnity (PI) Insurance

For architects, engineers, quantity surveyors, and project managers, Professional Indemnity insurance is both a regulatory obligation (required for practising licence renewal) and a fundamental business protection. PI premiums are typically calculated as a percentage of gross fee income and can represent a significant annual cost for active practices. They must be pro-rated across your active commissions so that each project absorbs a fair share of this overhead — rather than being treated as a lump-sum cost that distorts your practice’s profitability analysis.

WIBA and Group Life Cover

The Work Injury Benefits Act (WIBA) requires all employers to carry adequate insurance cover for work-related injuries and fatalities. On construction sites, where the risk of injury is statistically higher than in most other sectors, this is a non-negotiable compliance obligation. Premiums should be budgeted per project based on the assessed risk profile of the works and the wage bill of workers on site.

Record-Keeping, eTIMS, and Accounting Technology

The era of shoe-box accounting — receipts and invoices stuffed into a folder and handed to an accountant in March — is incompatible with modern KRA compliance requirements. Kenya’s construction professionals need robust, real-time record-keeping systems that can withstand an iTax audit.

KRA’s eTIMS Requirement

KRA’s Electronic Tax Invoice Management System (eTIMS) requires all VAT-registered businesses to generate and transmit tax invoices electronically in real time. For construction professionals, this means every invoice issued to a client such as a progress certificate, professional fee invoice, or variation account must be generated through a KRA-compliant invoicing system. Non-compliant invoices cannot be used by your clients to claim input VAT, which creates a commercial disadvantage and contractual disputes.

READ ON:An Accountant’s Guide to eTIMS Compliance in Kenya

Accounting Software for Construction

The right accounting software transforms construction financial management from a reactive, year-end exercise into a proactive, project-level discipline. Consider the following options based on your business size and complexity:

• QuickBooks Online: widely used by SME contractors and professional practices in Kenya; integrates with eTIMS-compliant invoicing solutions
• Sage 50 / Sage 300: suited to medium and larger contractors managing complex project cost codes and multi-site payroll
• Procore / Buildxact: international construction management platforms with integrated cost tracking, used increasingly by Kenyan developers on larger projects
• Custom ERP solutions: for large contractors with significant plant, materials management, and multi-contract complexity, a customised ERP with a dedicated construction module may be justified

Whichever platform you choose, the non-negotiable requirements for construction accounting in Kenya are: project-level cost coding, bank reconciliation capability, PAYE and levy payroll processing, VAT return preparation, and WHT certificate tracking.

What are the Common Accounting Pitfalls in Kenya’s Construction Sector?

The following mistakes recur across contractors, consultants, and developers of all sizes. Recognising them is the first step to avoiding them.

• Mixing personal and business finances: Operating a single bank account for both personal expenses and business transactions makes it impossible to produce accurate financial statements, claim legitimate business deductions, or demonstrate a clear financial position to a bank or finance provider.
• Poor documentation of subcontractor payments:Every payment to a subcontractor must be supported by a signed quotation or subcontract agreement, a delivery note or completion certificate, a KRA-compliant tax invoice, and a WHT certificate if applicable. Undocumented cash payments are a major audit risk.
• Missing VAT return deadlines during slow periods:The obligation to file does not pause because a project is on hold. File a nil return, or a return reflecting only input VAT, by the 20th of every month without exception.
• Misclassifying capital expenditure:A concrete mixer purchased for Ksh 1,600,000 is a capital asset subject to wear and tear allowances — not an operating expense to be fully deducted in the year of purchase. Misclassification distorts your profit and attracts KRA scrutiny.
• Ignoring retention receivables:As discussed earlier, retentions are assets. Not tracking them actively costs construction businesses significant revenue every year.
• Failing to account for variation orders:Every approved variation to the original scope is a contract amendment and must be reflected in both your project cost account and your revenue recognition schedule. Unapproved variations should be escalated promptly — do not carry costs for work that has not been contractually sanctioned.

Practical Recommendations: Building Financial Discipline Into Your Practice

Financial discipline in construction is not a year-end activity, but a habit built into the daily and weekly rhythm of your project management. Here is a practical framework for Kenyan construction professionals:

Monthly Non-Negotiables

• File your VAT return by the 20th of every month, even if it is a nil return
• Remit PAYE, NSSF, SHIF/SHA, and Housing Levy by the 9th
• Reconcile your bank accounts against your accounting system
• Update your project cost ledgers with all new invoices and payments
• Issue interim payment applications to clients on the contractually agreed date

Quarterly Reviews

• Conduct a project profitability review for each active commission: actual vs budget
• Review your retention schedule: are any retentions due for release?
• Make your provisional income tax instalment payment (due 20th of 4th, 6th, 9th, and 12th month of your accounting year)
• Review your debtors ledger and chase outstanding invoices

Annual Actions

• Prepare audited financial statements if your company is required to do so under the Companies Act
• File your income tax return by 30 June (companies) or 30 June (individuals)
• Review your NCA registration status and renew if required
• Renew your Professional Indemnity insurance and update your practising licence
• Conduct a full tax health check with your accountant — identify any exposure before KRA does

Work With a Construction Accounting Specialist

The financial complexity of Kenya’s construction sector demands more than a generalist bookkeeper. It requires a CPA Kenya-registered accountant or firm with specific expertise in construction accounting, KRA compliance, project cost management, and IFRS reporting.

Whether you are a sole-practitioner architect managing two commissions or a mid-tier contractor running fifteen concurrent projects, the investment in professional accounting support pays for itself many times over — in avoided penalties, recovered retentions, accurate tax planning, and the confidence that comes from knowing your numbers.

🏗️  Ready to Put Your Construction Finances on Solid Ground? Contact Alphacap today for a consultation with a CPA Kenya-certified accountant who understands the unique accounting and tax challenges of Kenya’s construction sector. From project cost management and VAT compliance to payroll processing and annual financial statements, we provide the financial foundation your business needs to build on.