In an industry with fine margins, significant pressures from stakeholders and so many external factors, delivering a healthy profit from construction
In an industry with fine margins, significant pressures from stakeholders and so many external factors, delivering a healthy profit from construction projects can be incredibly challenging.
Whether you’re working on small-scale tasks for clients or large-scale projects in partnership with a variety of other organisations, maintaining your financial reward is crucial for the future of your company. Here’s how to boost profitability.
Tightening belts, particularly in the current economic climate, is certainly something easier said than done. However, effective financial control and management are fundamental to delivering profit at the end of a project.
Cash flow is just as important as your profit and loss, so you need a competent team to oversee all financial aspects of your operations consistently. Ensuring orders are absolutely necessary and sourcing the best trade deals should be key factors in minimising production costs without impacting quality.
Better estimating and forecasting
One vital aspect of keeping your finances under control is accurate estimating and forecasting. If you provide low quotes and contracts are signed, there’s no going back and you’re bound to take a big loss. Competent estimators should give your company the ability to turn a healthy yet realistic profit.
Likewise, forecasting is key to managing costs during projects. Whether it be labour requirements, material supplies or equipment hire duration, accurate forecasts help to minimise waste and unnecessary spending.
Investing in training
Your workforce is one of the major components in the effectiveness and profitability of your operations. Mistakes, errors and misjudgements may seem insignificant individually, but they all add up to drain your time and money.
Quality and consistent training (and upskilling where necessary) can boost the productivity of your team and deliver better results for the company. If your staff feel valued and have growth opportunities, you can also benefit from lower turnover and a more united workforce to boost performance.
Look for efficiencies
Efficiencies can be found throughout the construction process, from using CAD design software to speed up the collaborative process to using the right tools and PPE to enhance safety. Improvements can even be made with changes to the structure of the working day or management hierarchies.
Wherever you can make a process faster, simpler or more effective, there is a touch more profitability to be had. Efficiencies may only represent a small change, but they can accumulate significant returns down the line.