When you’re competing for every dollar, you have to look for opportunities to safeguard your margins.
1. Scrutinize your costing structure for opportunities
There are a variety of ways to set up your costing structure. Some construction companies lease equipment to the job site. For example: The construction company owns a truck used on the job. The company bills the customer a rental fee for using their pickup at that particular job site. The rental to the customer may include a small mark up to cover administrative costs, insurance and margin.
2. Make multi-tasking a must-have skill
When you have good employees, develop them. Emphasize training, and cross-train employees to take on different tasks and support each other. Today’s margins don’t give you a lot of flex to have jobs slow down or stop, so having employees who can step in and keep things moving is a good profitability strategy.
3. Build long-term relationships with your customers
Communicating with clients is not limited to your business development (BD) professionals. In fact, most client touches are through project managers and superintendents talking about day-to-day issues. Make the most of these points of contact by providing training for your people in the field. Be sure to gather the information customers provide about their business needs and future plans as this may help your company in future bids.
4. Bid less, win more
Bidding on jobs takes time and resources away from current work. Focus bidding on jobs that are a good match for your company and its strengths. Bidding on quality jobs that leverage your experience gives you a chance to differentiate yourself and increase the odds of winning the work.
5. Don’t let the past influence financial decisions in the present
When you’ve experienced a successful, profitable period in a business, it’s not unusual to take that same point of view and try to apply it to tougher times. It’s one way to try to keep a positive outlook. But the truth is that the construction industry has changed, and is likely to continue to be different from even five years ago. Waiting for it to return to its original form as a booming industry keeps you from taking steps to adapt. Firms must adapt to the changed, competitive landscape in order to survive.
6. Try on some new technology
Your customers continue to expect more from you, not just what you can get accomplished but in what timeframe and budget. They also have the same expectations from you that they do other from other sellers—they want the process to be easy to understand and easy to complete. Technology is part of that equation. Find the people in your company who are adopting new technologies. Firms that are not technologically savvy will stand out in a negative way.
7. Drive precision with project management
The most recent construction boom allowed companies to focus less on project management. There were so many projects that profits could easily be recouped from one project to the next. Today, good project management skills are being revitalized with technology and analytic tools. The next generation of managers/leaders should be trained to manage projects effectively and efficiently with the insights these tools can provide.