Construction work succeeds on cost efficiency. There’s a lot of work to be done, but if you’re spending more money to do that work you’re being paid, you’re on the losing end of the business proposition. Watching your costs is an important part of this, as is finding skilled workers, which is becoming tougher with each year. But one area where you can exert a lot more control is being conscientious about costing your equipment. Here’s how that can make a difference.
You Need To Tackle The Math
Construction is, of course, all about having the skills, knowledge, and the equipment to get projects done. But profit only comes when you make more money than you spend. That means that there’s no avoiding the math of figuring out where your costs are coming from and making sure you strike that delicate balance between offering competitive bids, while at the same time ensuring that you and your people get paid.
Look at where your costs are and see where you can make your cuts. Does it make sense for you to own—and subsequently pay costs to maintain—all the equipment you need? Can some of your equipment conceivably be rented instead? How many jobs are you taking versus the amount of equipment that you own? What is your overhead for maintenance?
Finding the numbers and plugging them in is a good start towards making your equipment profitable.
Keep An Eye On ROI
ROI means Return On Investment, and it’s the concept that when you buy something, eventually it will make a financial contribution back to your business that is more than what you paid for it. Never purchase equipment without thinking about what the ROI is for that equipment. If you buy a truck that is never going to make its money back, that is going to hurt your financials.
Make sure that every purchase you make justifies its expense. Look at the cost you’re paying for it and, once, again, do the math. Figure out how much work this equipment needs to do for you to make back its purchase cost, and then start providing you with profit.
Think Like A Rental Company
You own your equipment, but when you take on a project, someone else is paying to use both the equipment and the skilled workers that come with it. This is where your math and your ROI work come to fruition. Look at the equipment you have, and the workers you employ and be diligent in calculating how much the equipment usage and quality labor that comes with it is worth.
You must ensure that equipment is being used cost-effectively and you must make sure that your skilled workers are being paid for their time. Of course, you should also make sure that your workers are justifying their pay and working at the times they’re expected to, which is where things like a time card calculator app can keep you and your workers on track easily.
Once you’ve figured out the numbers for a project, you’ve done all the heavy lifting for ensuring profit, and you can now concentrate on delivering quality results to your client.