July 1, 2021

Five reasons your construction project is losing money

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Five reasons your construction project is losing money.

Construction projects carry a lot of risk. The more risk, the more ways for you to lose money. From estimation, through to job tracking and close-out, each stage requires precise coordination to help keep your projects profitable. If you’re consistently seeing money leakage on your construction projects, here are five problem areas you can focus on to help minimise your losses.  

Problem 1: Inaccurate estimates

Estimates could cost you thousands if you’ve incorrectly quoted labour, materials or equipment. And that’s before the project has even begun! Make sure you have tools in place to create comprehensive budgets and precise estimates so you can avoid unnecessary losses and minimise risk. 

Now’s the time to stop using Excel to build your quotes and switch to estimating software built specifically for the trades and construction industry. With the right software you can quickly create scopes of work and use the built-in tools to ensure you’re sending out accurate estimates every time. 

Problem 2: Poor project planning and scheduling

What you do before and after the build-phase has just as much impact on your bottom line as the project itself. A good project management system can streamline your processes and centralise your workflows to boost efficiency and productivity. 

The right construction management software can help you put a work sequence in place that includes checklists for every necessary step. That way there’s no hidden or missing tasks causing work to fall behind schedule. 

When schedules are constantly being changed or updated, work slows and the quality of work begins to suffer. All of these little setbacks can compound so that even minor condition changes can have extreme (read: costly) consequences. A great Project Management system will enable you to be proactive, rather than reactive on site. Instead of focusing on “What’s gone wrong?”, your teams can see the big picture ahead of time and make adjustments to avoid major fallouts. 

Problem 3: Communication issues

The relationships between your teams, contractors and clients is vital to the financial success of your business. Ensure you have processes in place that promote simple and effective collaboration between all key stakeholders. 

With an all-in-one cloud-based platform, remote workers can stay in the loop at all times and have access to operational data from every part of your business. With everyone working off the same set of real-time data there’s less opportunity for errors because people are better informed and able to make faster, more accurate decisions. 

If unexpected changes occur, teams can be notified in an instant and timelines adjusted accordingly – reducing project delays, boosting productivity and improving client satisfaction. By providing real-time insights, decisions can be made faster to address situations before they snowball and impact your budget. Providing easily accessible and transparent project information to all parties will improve your operational outcomes and mean fewer costly mistakes.  

Problem 4: Data silos

The new financial year is a good time to get to know your numbers so you can see exactly where efficiencies can be made. A system that enables you to analyse real-time data will help you set project benchmarks and performance goals. You’ll be able to see exactly how you’re tracking at any given time and make adjustments quickly to avoid excess money leakage. 

If your critical project information is currently saved across multiple systems, in various locations, the odds of gaining any valuable insights are low. Without an integrated, streamlined system in place, it’s virtually impossible to act quickly enough to fix problems or avert risk. In this fast-paced day and age, an all-in-one system that can capture real-time, company-wide data, is a must-have.

Problem 5: Too many defects and bad project close-outs

Quality management on project sites matters. Not only does poor quality work cost you money but it can also cause delays, affect your client relationships and lead to bigger business problems down the track.

Quality management tools can help ensure everyone on-site is accountable and contributing to a high-quality build. These tools will enable you to put pre-construction systems and procedures in-place to ensure work is completed properly, the first time round. By enabling more accurate reporting and communication between project stakeholders, potential issues can be identified and resolved in real-time to keep work on schedule. By issuing digital project reports each week and encouraging complete transparency at every stage, you should be able to deliver consistently smooth handovers – and avoid budget blow-outs. 

Delivering better, more profitable projects

It’s essential to investigate the reasons your construction projects are losing money. Make sure you’re getting the basics right – from estimating, through to scheduling and resourcing, and quality and financial controls. The sooner you can identify issues the more chance you have of recovering your losses. Whatever you do, don’t wait until the project is finished to realise it’s been losing money. 

Use the new financial year to look at your systems and processes and start minimising your exposure to risks. Do you need to improve your estimation accuracy? Increase your mark-up? Reduce defects or costly on-site mistakes? Making small adjustments now could result in big cost savings when you need them most. 

Talk to the Nexvia team today at1300 942 399 or Request a Demo to find out how we can help keep your construction projects on track.

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