Contractor office team working with blueprints

Boost profitability from a different angle

May 24, 2022

Boost profitability from a different angle

Synopsis
3 Minute Read

Finding new ways to improve margins can be challenging, but working with an experienced consultant can open new opportunities and reduce unplanned detours.

As a general contractor, high costs of materials and labour have seen your already-thin margins soften. Combined with inflation and increased volatility in the marketplace, you’re facing strong headwinds just to maintain 1-to-5 percent quoted margins on jobs.

To expand or grow, the numbers need to change – but how? Construction companies usually draw on the experience of a long-tenured workforce to work out the kinks of complicated construction projects and make them run smoothly and profitably. Now many companies are facing the challenges of a quickly aging workforce that need better tools and more organized systems to profitably run the projects.

Improving your effectiveness

You and your managers have done all you could to increase efficiencies and have hit the ideas wall. Instead of making more cuts that ultimately could threaten the company’s sustainability, opt to gain a new perspective on how and what to change. An experienced project management consultant can offer unbiased insights into how to improve project and site management, as well as vendor management systems. Working closely with the consultant, you and your team will be able to transform operations to improved job profitability.

Nine-step checklist

To find out where your operations could see improvement and identify opportunities for your business, download our nine-step checklist here.

The following are real examples of how working with a project management consultant experienced in construction resulted in stronger margins and increased returns.

  • A review of Company A’s order management system uncovered areas that could be improved. Once changes were implemented, management was able to properly track the full scope of a project, capturing all extra costs billable to the client or to the vendors. The changes resulted in reducing unplanned scope changes by 30 percent.
  • Company B’s heavy equipment usage was bogged down by poor scheduling. A new scheduling system for site management increased the utilization of heavy equipment on site by 25 percent under the same budget, resulting in a substantial increase in profits.
  • A veteran construction company was using an accounting system that didn’t keep up with project inputs and expenditures. The project management consultant created a new structured reporting system that ensured profitability and schedule were controlled for each week of the project. The new system gave Company C increased visibility across the organization and created forward indicators before financials to ensure profitability.
  • The owner and executives of Company D were spending too much time on low-level decision making due to an inefficient governance system. Once responsibilities and accountabilities were properly distributed at each level of the company, day-to-day decision making were transferred from the owner to the lowest level, with accountability of outcome being held at the lowest level, up. The change freed the owner and executives to focus on high-level tasks, resulting in a substantial increase in revenues as new opportunities were found with the extra time.

Hiring an experienced project improvement consultant can open opportunities to increase earnings and reduce unplanned out-of-scope activities of construction projects.

Learn more

For more information, contact Yohaan Thommy, PMP, LSSBB, CMC, Partner.

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