Construction companies have two goals– to make buildings and earn a profit. Considering that, how come not all are capable of achieving those goals? Experts believe that one of the few causes would be how the bids are given and contracts distributed.
A lot of clients, specifically those who are part of the public area, often provide the tasks to the lowest bidder. This, together with the contractor’s expertise, experience, and quality of work, ensures that they would be able to do what is needed to be done.
As years went by, we can say that this is slowly changing as we are starting to see more request for proposals, design-build, and even prequalification request for bids. Basically, the price is not the sole focus anymore, but these other methods of solicitation which ensures that everything can be done at the cheapest rate possible.
Here are some of the ways that construction is increasing construction projects to be more profitable and safer.
1. Familiarize Yourself with the Costs
For you to be profitable and be able to improve profitability, you’ll have to know the costs related to completing each project. Be aware that not only does this include the job costs, but even the overhead costs are also part of it.
In such a case, you don’t have an idea of what project costs to complete, then you wouldn’t be able to determine how profitable each job is. Everything needed to accomplish the project are part of a job cost. This includes materials, labor, supplies, equipment, and many more. Even the permits, bonding premiums, etc. are included in this. Basically, as long as it pertains to costs on the actual job site, then it’s safe to say that it’s part of the job cost.
In terms of overall costs, when calculating and reporting, it’s essential that you capture all prices and try to be as accurate as possible because this is important when the estimators would have to submit their bids already.
2. Calculate Profit
When bidding on a project, of course, you are expected to win. As you gain a bid and you get the contract, making a profit is what follows. For you to reach that point, ensure that the estimates are as realistic as they can be.
Wherein, if your views are too low, then you are risking the chance of gaining maximum profit. This is also one of the few reasons, it’s essential to have an accurate account of your job costs and overhead. It makes it possible for your estimators to incorporate proper markups that would help you reach your margin goals.
3. An Improvement with Productivity
Productivity is like a road flare in the construction industry. Once it becomes noticed, everyone will begin to realize the importance of it. In the construction industry, the end product could be something that’s between cubic yarns of earth uncovered, which is measured through man-hours.
Having the ability to maximize productivity on the job site entails working efficiently when it comes to controlling costs and being able to stick with the schedule. Additionally, tasks that are accomplished on a tight budget and in advance usually yields higher better margins and for that, construction companies are always in search of ways on how to modify productivity on the job site.
As we talk about improving productivity, it’s crucial to plan everything carefully, and pay attention to the schedule of work. Wherein, general contractors, as well as trade contractors, should work hand in hand to ensure that task is carried out logically and the focus is on maximizing profit.
Also, since the construction workers are a crucial aspect of productivity, it’s essential that the workers could decently and safely work on their regular assignments. This includes paying attention to every worker and making sure that they have the correct preparation and are outfitted with the latest tools and root that could help them carry out their task and responsibility.
You also have to ensure that as we talk about worker efficiency or the lack of it, one crucial aspect would be productive. There are a lot of factors that could hurt productivity, and through the extension of profitability that’s included in supply chain handling, poor scheduling, and accidents, you’ll have to focus most of your attention on how to prevent these.