Faced with worker shortages, many contractors are looking for ways to do more with current staff. One way to achieve that goal is to eliminate top time wasters often present in construction firms. This is the second in a series of posts that identifies those time wasters—both in the office and the field—and shows how technology can help eliminate them.
Nothing is a bigger time waster than focusing employees on a project that ends up barely covering costs, or worst, puts you in the red.
Ask yourself these key questions about your current jobs:
- Are you able to view at a glance which projects you are making and losing money on based on current billings and costs?
- Do you know how changes on a project are impacting your overall profitability?
- Can you tell exactly which parts of the project you are under or over budget?
- Do you know all your committed costs by job?
- When you close out a job are you confident you won’t receive a late invoice that you had forgotten about?
If you answered “no” to any of these questions, you don’t have the daily visibility you need to control project costs and ensure your team will reach profit goals.
Tracking job cost efficiently
If you want to improve profitability on your jobs, the first thing to look at is your accounting processes. While many accounting systems are great at handling most business accounting requirements, they are not set up to meet the unique needs of construction contractors when it comes to managing job costs. Consequently you or your staff may have to track job costs separately using spreadsheets (another time waster). This process is doable when you have only a few projects to keep track of. But as more business comes in your door, the process of tracking job costs can become a huge time drain on employees doing the work. It also becomes more difficult to keep the data current and usable for cost control.
Construction-specific accounting systems track job costs as part of your normal accounting and project management processes to give you the insight you need. On a daily basis, you can see at a detailed level where a job is at cost-wise and whether you are on track to meet profit goals. And if you see an overrun you can take action to proactively prevent profit erosion before it’s too late. Construction-specific software can also track all committed costs and change orders for even greater profit preservation.
Taking it a step further
Some contractors are even more proactive in monitoring their costs and profits. For example, Brian Garcea, CFO at RG Construction has set up an automatic alert that notifies his team of jobs that haven’t been billed or when the current profit is less than a certain percent. These type of alerts are like having a personal assistant constantly monitoring your jobs for issues that could cause profit loss.
Another factor to consider is whether or not you should even take on certain projects. Especially with limits on the availability of qualified workers today, your employees’ time and effort ideally should be spent on jobs that are most likely to be profitable. By analyzing past project financial performance, you can identify which types of projects traditionally have been most profitable, and which ones have not. This allows you to focus your team’s attention on going after your “best fit” work. The results? Higher profits and employees who feel their hard work has made a difference to the company’s success.
For more information on other time waster, download our new e-book.