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Four Ways to Reduce Overhead Costs and Increase Profits in Your Construction Business

2018-04-23 07:20:49.0

| Author: FAS

FAS specializes in small business bookkeeping and tax services. We work closely with small businesses in Katy, Fulshear, Houston and nearby areas. Call us for Free Consultation: 832-437-0385 .






 

   If you’re venturing into the construction business, overhead costs are large portions of the project budget that can make up a huge difference in your proposal. That’s why high capital is usually required when starting a business in the construction industry and will encounter a lot of expected and unexpected costs that you need to take care of as soon as possible.

     Here are a few ways to reduce the high costs in your construction business:

 

Make Your Fleet Cost-Efficient

   Now is the time to take a hard look at this major expense. If you have a large vehicle and construction equipment fleet, you will need to analyze their fuel consumption and determine how these overhead costs can be reduced. There are solutions that can be established that will determine how much fuel your equipment is using and you can always try to invest in hybrid, electric or fuel-efficient vehicles.  Consider getting rid of unused and old vehicles and replace them with new ones or leasing. Maintaining old vehicles can be more expensive than buying new ones. Plus, new vehicles are more efficient—saving you cash in the long run.

 

Looking for New Technology

   Investing in new technology can help get the job done faster and at a reduced cost. You have to make sure your practices and procedures are up-to-date and look for streamlined processes.

   Consider the use of cloud services and other software technologies that will be most appropriate to meet your business needs.

 

Build Good Relationships and Negotiate Contracts

   Negotiations are very important in business. These serve as the tangible form of the relationship between two parties. Developing stronger relationships with reliable suppliers who are focused on creating long-term relationships are worth considering.

 

Enhanced Controlled Change Order Process

    Prior to getting that extra work or change order done, analyze the circumstances and why that change is occurring. When an unexpected job site condition crops up, the first inclination of a contractor is to jump in and fix it, then hope to be paid later. Invest in a tightly controlled change order process to ensure that work done beyond the scope of the contract will be well-documented and approved prior to incurring additional costs. In addition to saving on project costs, expect savings related to additional audit and lending costs associated with unpriced change orders at year end.

 

   Breaking the high costs of your construction business is possible! All you need is to focus on cost-efficiency—even if the starting capital may be a bit more expensive. Aim for long-term savings. We hope these tips will help you reduce your costs.

 

If you need help with your cost management, as well as bookkeeping and tax preparation for your construction business, contact us today at cristy@fas-accountingsolutions.com or 832-437-0385.


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