Tips For Keeping Track Of Your Construction Costs

Tips for Keeping Track of Your Construction CostsBy Robert J. Hall

The construction business is full of variables: Recent statistics put private sector construction spending, after a variable decade, once again almost at the level it had reached in 2004. Unfortunately, there is still room for growth before it reaches the highs of 2006 to 2007. Public sector spending has held relatively stable over the past eight years, with a slight dip recorded in 2013.

Cost estimating, specifying materials, and managing and tracking job progress all affect profitability. Additionally, small-volume homebuilders as well as large corporations always seek to maximize effort and efficiency in order to boost dollar return. However, contingency planning is as vital in the construction trades as know-how and experience.

How to Plan for the Unexpected

Companies that expect the unexpected are ahead of the game when it comes to absorbing extra costs and time expenditures. Success depends at least as much on timely completion as on on-budget expenditures. Specifically, then, what factors are the most important to assure a healthy bottom line?

  • Control costs. Even more importantly, track your costs constantly: It is one thing — and an important dictum — to control costs on a single job. However, it is vital to monitor costs on an ongoing basis over an extended period of time, and across all jobs. Depending on your business volume, you may find large seasonal price swings in costs. You might be able to track trends as they occur, before you are surprised by the figures on your quarterly profit and loss statement. It might not happen often, but think of the benefits you could accrue if you were able to reward a loyal subcontractor with an incentive or authorize a bonus for an employee.
  • Keep a watchful eye on tools, equipment and your vehicle fleet: The mechanical tools you utilize on each job contribute as much to your success as the people, so it makes sense to care for them properly. There are specialized software tracking programs for all types of equipment, from a vehicle fleet to specialized construction equipment. They can be a huge benefit in terms of efficient scheduling, decreasing down time due to routine maintenance, fuel and energy costs — and accounting for missing and misused items.
  • Plan for growth, or plan to grow smaller: Whether your plan is to grow larger or to grow more efficient, consider the future in terms of the past and the present. Expanding too fast can be the kiss of death for a profitable small firm, while planned, effective trimming might be the key to a prosperous tomorrow.

Just about the only constant in construction is that every day will be different, and that most days will be extremely interesting. If you plan successfully, those days will be personally and financially rewarding, as well.

 

Robert J. Hall is president of Track Your Truck, a leader in GPS vehicle tracking systems and software for small and midsized companies.

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