Agile Construction® Blog

3 Simple Ways To Increase Profitability In Construction

Aug 27, 2020 12:56:01 PM / by Nicholas Aloisio

 

No other industry has such a wide range of profitability outcomes from job to job like Construction.  One job will make 40% margin, the next, you lose 25%.  At WEM® Software, we work on both ends of the spectrum, helping reduce the wide variance, while also increasing overall profitability from job to job.  Here are 3 ways you can help yourself begin to reach that goal.

Check Out 4 Tips To Improve Productivity Here

 

1: Set Aside Appropriate Time For Planning

It is no secret that a vast majority of the time, project management begins like this:

1. Estimate The Job

2. Win the job as lowest bidder.

3. Job gets handed off to PM to "figure it out".

4.  PM gives labor hours budget to Foreman and tells him not to go over.

5. Foreman scrambles daily trying desperately to stay on budget

6.  Job either makes or loses money

7. Job review at close out, Foreman and PM are expected to explain what "went wrong".

Sound familiar?  That's because it's the way projects in construction have been managed for the past several decades.  Our team wants to challenge that notion.  We think that spending just a little bit of time on the front end can pay off big time at the end of the project.  We work with our clients to break down their estimate into smaller more visible pieces.  Why?  Because when you are tracking production and productivity, accurate observed percentage of completion is key.  Whether you break down the work simply by cost code, or go deeper with task level breakdown, the more you and your project team can visualize what "done" actually means, the more accurate your job tracking will be.  We work with clients every day to accomplish this and the return on the resource use always tends to be massive.

Want To Learn More About Work Breakdown Structure?   CLICK HERE

2: Track Job Progress with Visual Aids 

One of the reasons that our clients are so successful is because they have access to visual aids in terms of charts and graphs that help them better understand trends on their jobs.

Take a look at the image below:

  JAPC-Poster-1-31-19-v1

As you can see, being able to visualize how the job is performing can greatly benefit project management.  It's one thing to look at numbers, it's quite another to have a strong visual representation of what is actually happening on the job site.  

Want To Learn More About JPAC? Click Here

 

3: Use Data To Improve Billing

Improving cash flow is a goal of every contractor that I've ever met.  I've also not met one that was satisfied with how and when they got paid.  Our WEM® Software clients are beginning to become the outliers.  We are teaching them how to use the data that they gather to bill much more effectively and maintain positive cash flow throughout their jobs.  It really all boils down to reviewing contract terms and using some federal laws to your advantage, both things that we have helped hundreds of clients with.   In fact, a new accounting standard ASC 606, when applied properly is one of the strongest tools that you can use to achieve that initiative.  

Want To Learn More About How WEM Software Can Help? Click Here

 

 

Topics: construction productivity, jpac, sis, production tracking, construction software, improve estimate, estimate accuracy, construction estimate, agile construction, improve productivity, construction tracking, coronavirus, construction scheduling, bid accuracy, labor productivity, labor cost

Nicholas Aloisio

Written by Nicholas Aloisio