How can construction companies gain better profits?

The way in which the construction industry works makes it difficult for the AEC companies to yield higher profits. Right on the very onset clients tend to choose companies which have lower bids making it a significant challenge for companies to focus on both, gaining the contracts and making a good profit. Along with it, rework due to various onsite issues, payment issues and ever changing labour laws all of which drains the company’s monetary resources. Thus, it becomes very difficult for construction companies to thrive and maintain healthy margins. They might have to think out of the box and adapt in order to make a sizeable profit.

In this article, we will be focusing on ways in which construction companies can improve their margins by various ways such as finding new niches or implementing modern technological innovations or by setting the right profit goals.

1. Know the costs:

The construction company, in order to be profitable and to improve their profitability, must firstly understand and calculate the cost associated with completing each project. This means both the cost of the project which includes labour, materials, equipment rental, fuel, permits etc. as well as the overheads like payroll, insurance, office rental cost etc. It is only after the actual cost is calculated that the construction company can determine and set their margins.

Moreover, lower bids could a lot of time lead to a lose-lose situation where the construction company may cut costs by using substandard products, inexperienced labour etc. Instead the companies must set a price and focus on getting quality projects which would take advantage of their skillset. It is in most cases better to get fewer jobs with higher margins than to work on low margins which would lead to loss.

2. Reduce Mistakes:

Mistakes in the construction sector can be extremely dangerous. In the best cases they lead to rework with loss of resources, time and money while in worst case it could lead to causalities and lawsuits which could bring the whole construction process to a standstill. It is imperative that such mistakes are caught right in the pre-planning stage where there can be no adverse consequences. MEP BIM Services can be extremely beneficial as it allows to detect any hard, soft or workflow clash right at the onset. BIM clash detection tools like Navisworks can identify, inspect and report clashes from the 3D model that is made by integrating architectural, structural and MEP components of the building. On top of that BIM also has tools which aid the

3. Modern Technology:

The construction industry has been slow in joining the digital revolution. There are lot of areas which are time consuming and financially draining which can benefit from automation. Moreover, the construction industry is already struggling to find skilled labour and automation can also take over certain processes like drones can be used for survey and supervision. They can go to places without any risk where supervisors can’t and they can cover a larger area in quick time. Similarly, there are robots and self-driving machines which can be used for repetitive tasks like brick layering or transporting materials. Similarly, modular construction can be used to create building components in a climate controlled factory environment which increases the speed and also provides better quality deliverables. However, the most significant benefit that can be gained out of modern technology is during the pre-planning phase. BIM Services can be used to create a 3D model which is the digital twin of the building which is to be constructed. It provides tools for better coordination, clash detection, mitigates risk, reduces costs etc. It also provides tools for proper scheduling, quantity take-offs and cost estimation which could help with bidding, understanding profit margins etc.

4. Find new profitable niches:

The construction sector is constantly evolving and rather than always going where the heard goes finding a new niche where there are is not a lot of completion could prove to be more profitable. Similarly, the core business expertise could remain the same but the construction company could have dedicated teams or a set percentage of business that could venture into the new niche. A lot of companies today specialize in a particular field like a home construction firm specializes in building additions or a construction company that only does period restorations of older buildings. Looking to diversify into new fields where not a lot of other people have expertise allows to keep bigger margins as well increases the company’s reputation.

Conclusion:

In the construction of any building or a structure there are a lot of variables that could lead to a change in the cost. It becomes very difficult for the company to survive on razor thin margins if anything we to go wrong. The company must thus right from the pre-construction adopt methods which can lead to better project outcomes in good margins.

Tesla Outsourcing Services is an architectural and engineering firm offering Bim and Cad Services. We have completed over 1000+ projects for clients in UK, Europe, Canada, US, Australia.