Streamline Construction Processes within your Company

Why NOW is the most important time to implement strategies to streamline your construction company.

For Contractors in NYC and throughout the county, the boom of projects in the municipal sector has just begun. As the residential and commercial sector pulls back, the city and state are lining up billions of projects, with 30% carved out for registered MBE & WBE Contractors.?

Are you ready?

How do you protect your company from over comitting while growing steadily to capture as much as possible. You are leveraging the glut of projects to grow your business without killing it.?

Based on years of experience it boils down to consistently focusing on five areas that will grow your business while retaining profits by controlling project costs. Without a mechanism to control project costs, revenue will have minimal impact.?

When contractors concentrate on these 5 Profit Centers they build more resilient, healthy, and substantial companies.?

1. Strong Relationships. How strong are your relationships?

Improving your business by establishing resilient internal and external relationships is vital to building a healthy company.

Results are sustainable and lead to a significant increase in:

• productivity and coordination between teams and employees,
• flexibility from vendors,
• larger scopes of work from clients,
• multiple projects from the same client,
• and communication during estimating and bid leveling.

2. More Estimates into Projects.

Foundationally, you must understand who you're selling to.

Then you must understand what problem they have but don't want. It's why understanding who you're selling to is vital. Different people/roles have vastly different problems.?

Finally, you’ve got to understand where they are in the bid process.?Then focus on the solution they are looking for that you can provide.?

3. More Projects per Client.

How are you developing trust and proving your proficiency on your current project??

How can you create and deploy a transparent communication system with existing clients on your current job sites??

What questions are you asking to understand how you can be more helpful and valuable to your clients right now?

By understanding and taking action to build expertise and trust with existing clients, you significantly improve the number of projects they'll pull you into in the future.?

4. Higher Contract Totals.

Bundling services is a great way to help your client by offering them cost-effective solutions.

Discuss the projects you are bidding on with your best clients. Are there adjoining trades they are struggling with that you can scoop up? Is it work your current teams can perform well? Will you need to hire additional crews? Is this something you can build on?

5. Higher Profits.?

Retaining more profit from projects is all about project profitability and project tracking.?How do you track material purchases? How do you know how many labor hours are on a project? Once you know, how do you track them?

Utilizing these specific strategies, when applied consistently, will create a profitable and successful company that will sustain market volatility, like recessions, as well as booms.?

Construction companies don’t die of starvation; they die from overeating.?

I’ll explain how with an HVAC contractor from the Bronx.?

Their revenue for last year was about $3,650,000. He decided to keep his revenue stable while focusing on the last of the 5 Profit Centers, higher profits.?

Previously they averaged around 20% Gross Profit on their projects, which means he spent $2.9M of the $3.6M on project costs (or Cost of Goods Sold), with a Gross Profit of $730,000. His Operating expenses came to a little over $657,000, with a Net Profit of only $73,000.?

Because the Net Profit was so low, he constantly ran into cash flow issues, which restricted the company's growth. He couldn’t bring on larger projects, even if he won them.?

At the same time he scrambled to bring in the next project to inject capital, but compounding the same issue on top of another project just resulted in chaos.

This is how Construction Companies die. Painfully and slowly, over many projects, until one thing goes wrong, wiping out all the gains. It can result in legal, DoL, and client issues, and sometimes all three simultaneously.?

Focus on one at a time. Optimal results come from consistent effort and dedication to the improvement goal, making it essential to stick with these strategies, even if you become frustrated. Pick one and develop your strategy.? Implement and track the impact they have on your bottom line.?

With the Bronx Contractor, we developed systems that controlled project costs. Project tracking is THE most efficient way to create a healthier company. We brought his project costs down from $2.9M to $2.1M, which enabled him to raise his operating expense from $657,000 to $741,000. Aside from investing in coaching, he also hired a more experienced project manager, one of the best investments he could have made to keep his project expenses in check.?

At the end of the year, we moved his Net Profit from $73,000 to almost $719,000, which was our goal. These profits are being folded back into the company to ease Cash Flow as they take on larger projects. Here’s the breakdown:?

Now that his system for projecting, tracking, and recording project expenses is in place, he can focus on estimating more projects (#2 in the 5 Profit Centers) and growing his revenue. ?

Which of the 5 Profit Centers will you implement first? How will you track the progress so you know if it’s working??

Let me know! I’d love to hear from you.?