With the average net profit margin hovering at a modest 3-7 percent, it’s easy to see why precise cost accounting is necessary for succeeding in the construction industry. Maximizing profits in construction requires the consideration of all costs, and neglecting overhead expenses when bidding projects is a big mistake.
We’ve handpicked 3 contractor-driven tips that will guide you towards financial success. Get ready to win more projects, complete them on time, and boost your profits.
Here are 3 tips to reduce overhead and increase profits in your construction business:
Precision in Project Estimation
As a skilled contractor, you understand that accurate project estimation is the cornerstone of profitability. It requires a comprehensive understanding of the project scope, a keen eye for potential challenges, and a strategic approach to pricing that positions you competitively in the market.
Project estimation isn't guesswork but a strategy for financial success. Invest in sharpening skills to craft precise bids for profitability. Enhance your estimation with these steps:
- Prioritize continuous learning
- Utilize estimating software
- Analyze completed projects
- Build and maintain a cost database
- Request constructive criticism
- Network with fellow professionals
- Stay in the loop on regulations
- Seek mentorship from estimating experts
Free Construction Business E-book
10 Strategies for Construction Business Owners Aiming to Grow and Endure
Efficient Project Management Systems
The entire construction process comes with a lot of chaos: getting everyone on the same page, communicating project expectations, tracking project progress, and mitigating risks.
Developing standardized project management processes with clearly defined roles for each team member is essential to your profitability in the construction industry. Here are some systems to address before they become profit-eating monsters in project management:
- Generating change orders
- Customer approvals
- Scheduling tasks and sub-tasks
- Project progress tracking
- Viewing, managing, and reporting on employee time
- Organization of documents, photos, and videos
- Vendor and subcontractor communications
- Bid requests
- POs and work orders
- Job finances
- Building estimates and sending proposals
- Tracking and managing leads
Tech-Enhanced Construction
Embrace technology as a must-have weapon, not just a tool. Harness its power to streamline, innovate, outpace competitors, and attract premium clients. Here are some avenues to explore if you want to use technology reduce overhead:
- Cloud-Based Storage
- Automated Billing and Invoicing Systems
- Augmented Reality (AR) and Virtual Reality (VR)
- Estimating Software
- Construction Management Platforms
- Mobile Apps
- Drones and Surveying Software
- Energy-Efficient Equipment
- Project Management Software
The Best Way to Increase Profits in Construction
Thriving in the construction industry demands a sharp focus on slashing avoidable costs. Trim expenses to boost finances, adapt to market changes, and attract clients for lasting prosperity.
JobTread understands the chaos that comes with owning a construction business. Partner with us to take command of progress tracking, resource allocation, project delivery, and more.
Want to take your business to the next level?
JobTread can help you win more jobs, complete them on time, and increase your profits.