The most successful construction companies know three things:
- What they do really well
- Which jobs bring in the most money
- Where they see their highest bid-hit ratios
Many contractors know what they are good at, but they’d be hard pressed to say which jobs they should focus on to improve their profit picture. As a result, they often take any job that comes their way. How can you zero in on the best opportunities for your construction business? As a starting point, look across all your projects for the past two to five years. (This is where you need to have a really good handle on your actual project costs and profit numbers.)
- Do you see common trends across your most profitable projects?
- What patterns do you see between projects with less than acceptable profit margins or where you lost money?
- Are there certain types of projects that bring in more money than others?
- Is there a difference in profits based on geographic location, customer characteristics, project duration, or other project components?
Also look for less than obvious trends as well as potential opportunities. For example, maybe some smaller jobs were not as profitable but led to more work. Or perhaps you did well on projects that were not perfectly in line with your capabilities. This could identify areas of expansion for your company if you invested in improving your skill set. Overlaying bid-hit ratios onto profitable projects could further define your project “sweet spot.”
For more information, check out the top three KPIs your construction firm should be watching to win more profitable work.
About the Author
Deb Carpenter-Beck is a writer and marketer with more than 25 years of experience in the construction and real estate industries. She often writes about technology and best practices and is passionate about helping contractors and real estate professionals achieve their business goals. You can follow her on Twitter @SageDebCB.