Construction is one of the most competitive industries. Consistently entering the lowest bids can help you land more projects. However, it can also make it more challenging to turn a profit if you're not generating sufficient revenue or minimizing costs. Knowing how to grow a construction business is only half the battle — it's also imperative to understand what it takes to establish and maintain a healthy bottom line.
How to Increase Construction Profits
The following steps can help you improve construction profitability:
- Maximize productivity: In the construction business, increasing productivity entails completing projects on schedule and within budget. Efficient planning and coordination are both essential for achieving these objectives. It's also crucial to provide your workers with the equipment they need to get the job done quickly and safely.
- Control costs: Project costs encompass everything from labor and materials to equipment and insurance. Capturing all expenses as accurately as possible will enable your estimators to submit bids that will help you get the job — and execute the project profitably. You'll also need to track costs closely from start to finish and make adjustments as needed.
- Fine-tune your estimating process: Knowing how to increase profit margin in construction requires sound estimating practices. Equipping your estimators with state-of-the-art estimating software can significantly improve their accuracy, as it will give them access to relevant data from previous projects. Your estimators should also account for risk factors that could increase project costs.
- Establish profitability goals: Setting short- and long-term revenue and profitability goals can help you create a roadmap for a successful construction operation. You'll have a better handle on the types of projects you want to take on. You'll also be able to provide more input for your estimators regarding the ideal markup percentage for each bid.
- Keep the communication lines open: Use daily reports, field notes and other methods to facilitate communication between all parties involved in the project. Besides being able to track the progress of the job more efficiently, you can anticipate and remedy issues that could lead to costly delays.
- Conduct a thorough postmortem: After each project, compare your estimated and actual profit. If you fell short of your objective, conduct a comprehensive analysis to determine areas of improvement. Gather input from your team to assist you, and create an action plan to address the shortcomings in upcoming projects.
Using Equipment Rentals to Improve Construction Profitability
Renting heavy equipment can help you meet your profitability goals in several ways. You'll gain access to technologically advanced, late model machines that can increase productivity and efficiency. You can also get a fast replacement for a unit that's in the shop for repairs, helping you keep your work on schedule. What's more, renting offers a cost-effective solution for meeting increased equipment demand and taking on larger projects.
The Cat® Rental Store Can Meet All of Your Equipment Rental Needs
Your nearby Cat® Rental Store has the equipment you need, and we'll do whatever it takes to help you meet your profitability goals. Give us a call at 1-800-RENT-CAT or browse our equipment online and contact us for a quick quote.
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