Making Every Project More Profitable Than the Last
Conley Smith, Sr. Marketing Content Writer, ConstructConnect
Posted: July 8, 2021 | Project Management
If these last few months have taught us anything, it’s that the ebb and flow of the construction industry can make even financially strong construction businesses feel uncertain. One day, you’re trying to keep your crew busy and fill your project pipeline. The next day, you may be struggling to keep pace with the jobs in the field.
Especially in times of rising material costs, contractors should never give a quick cursory look at the fine details of a project just completed because they’re too busy looking for the next construction job. Without access to historical estimating data and a consistent post-project review system, your construction business — whether it’s drywall or roofing — could end up making the same mistakes again.
It is critical to apply lessons learned from one job to the next; it allows you to build on your construction knowledge and make critical adjustments to projects in progress. This is especially true when projects are pushed, put on hold, or outright canceled due to a changing economic landscape.
How to Make Every Project Profitable
Let’s say you’re a concrete subcontractor specializing in decorative concrete. Even though you’re focused on delivering quality and expertise, you fail to complete each job with a profit and loss (P&L) statement. A P&L statement is essential if you want to close the loop from the office to the field and back again. The statement helps you make sure the job you just finished is as profitable as the next one you’re about to begin.
One way to achieve this more easily is with user-friendly software. When contractors use tools to track progress against their original estimate, they can more accurately predict just how long it will take to complete the next job. For example, estimating software can help you get a jump on that next job by saving your historical calculations. It can also help you make better bidding decisions when choosing the right projects for your business.
When you use software to track your productivity, you can more easily see how cost overruns and project delays impact profits. In addition, cloud-based software applications can improve communications and ensure that crew members are no longer tied to one server back at the office.
How to Have a Strong Post-Project Strategy
Consider how a strong post-project strategy can boost your reputation with construction clients. Why not wrap up a project by meeting one-on-one with your client to discuss the job just completed? This allows your business to document just how well expectations were met from the customer’s vantage, and gauge their overall satisfaction.
Combine the customer’s feedback with the notes gathered in the internal post-project review. Be sure to include senior managers, estimators, project managers, the superintendent, the job foreman, and the director of operations. Allowing them to provide feedback will help you evaluate everything from job safety to project scheduling.
Here are more recommendations for contractors to build a strong post-project strategy:
- Compare your actual costs to your budget.
- Make sure your estimator receives positive or corrective feedback from the project management group for future bids.
- Capture before, during, and after photos to illustrate what worked and what didn’t work.
- Spend time reviewing with crew members, the estimator, project manager, and administrators all pertinent aspects of the project, including change orders and bid to final costs.
- Take lots of digital pictures and notes from your team lead to create a top 10 strengths story and to identify your top 10 weaknesses.
Apply Takeaways to Your Next Project
It’s not easy to keep clients happy from start to finish. Do you tend to pour your focus into the next job without wrapping up the last one? Do you have a thorough review built into your closing process? Applying post-project takeaways from one job to the next can only strengthen your process for future bids and projects.
Even in tough times, it is easy to get caught up trying to win lots of jobs to compensate — without taking a step back to assess why you are bidding the jobs.
Becoming More Selective in Bidding
You can also use these post-project takeaways to shed light on how to become more selective in your bidding. Many firms will spend time and money chasing work they could end up regretting. They fail to narrow their focus by job size, geographic region, or work type.
Here is a simple formula to help you determine the best projects for your business:
- Review and calculate the percentage of profits from all jobs in the last year.
- Sort the jobs by the most profitable at the top and the least profitable at the bottom.
- Only take leads for work based on the top three most profitable projects.
In addition, winning specialized work will lead to stronger profit margins. For example, a concrete contractor could specialize in decorative concrete. By serving a segment, they can charge more for expertise and quality. Other contractors focus on second-story additions, kitchens and bathrooms, or develop an in-depth knowledge of how older homes in a neighborhood are constructed.
Software to the Rescue
If you’re compiling P&L statements in a spreadsheet or roughing out numbers on your calculator, you may want to consider integrated construction software. It can provide a comprehensive database where you can find historical pricing on cost items, including materials, equipment, and labor.
Having a single, go-to source of the truth will provide the post-project data at your fingertips so you can better prepare for future bids and jobs. In one location, you can find all the accurate estimating information you need to win more profitable projects.
If you’re ready to take the next step, be sure to check out ConstructConnect’s integrated estimating tools now.
Conley Smith is a senior marketing content writer with ConstructConnect. She has been writing about technology and its impact on business for more than 20 years.