With the economy still struggling and construction output figures in February this year 7% lower than a year ago, the construction industry still has some way to go before it will see a rise in business. This makes it imperative that construction companies ensure they are operating as economically as they can. Get your construction business in the best financial position by controlling your expenses and limiting your administration needs to boost your profit margins.
Re-evaluate the company’s payroll systems and insurance
Payroll and insurance premiums tend to be two of the main expenditures in a construction business. So in order to increase efficiencies, evaluate how you are paying your staff and decide whether there is a different way to pay that would be more tax efficient. Is your insurance set at the right level for the amount of projects you are currently working on? Re-evaluating systems and procedures can reveal significant potential savings.
Look at current and past projects and clients
Take stock of projects undertaken in the past 12 months, assess how the projects progressed and identify ways to improve processes. Were there significant backlogs at certain times of the year? Were your staffing levels correct or did you need more or less on certain projects? Look at all your projects and consider if you could have made savings on them; were there even certain jobs, that on reflection perhaps you should not have accepted as your margin was too tight? Collate all this information and then implement changes on your next project.
Cut out unnecessary paperwork
The tender process for most construction projects is arduous. They take up precious time and resources and invariably the same questions recur over and over in different guises. Consider doing much of this work virtually: cut out the unnecessary form filling, go online and register with one of the prequalifications web sites. You fill in your details once and then buyers also registered can access your information. Even better, joining such a site is a great marketing tool as you will open up access to thousands of potential buyers. Many of the sites also arrange for events where suppliers and buyers can meet face to face along with offering discounts and alerts to new projects in your area. It really is a win-win situation as you save dramatically on administration whilst also promoting your company to potential new clients.
Ensure your estimates are realistic
A lot of construction companies underestimate the costs of projects, leading to lost profits. Make sure that the next job you quote on is a true reflection of the cost; double check your timelines, your staffing levels and negotiate a bit harder on materials. Then when the job is completed, go back and check over your estimate and actual figures and see what you can learn.
Bill Turner has been writes on blogs regarding construction-related topics. He also works in consultation with small to medium construction companies looking at ways, such as, using prequalifications, to gain greater efficiencies.