Many of us will look at sales for measuring the business success, however measuring success might not be just about sales. Enhancing the margin and reducing costs are critical for an increased profit.
Having a good project management system in place is important in improving profitability.
Keeping track of project costs is key including capturing variations and changes at an early stage to avoid any disputes or non-payment. Only proceed with the additional works if you have an agreement of costs in place by the payer.
Understanding your Profit Margin
Profit is the money a business makes after accounting for all expenses whereas Profit margin is the difference between what something costs for you and how much you charge for it. Margins can be shown in percentages and costs.
Therefore, it is important for a business owner to protect their margin as having a high-profit margin is a critical step to ensure financial success thus avoiding a place where you find yourself working hard but only to break even.
Over the last 5 years I have experienced businesses within the construction industry increasing their turnover some even double and ended-up in huge financial difficulty mainly due to the fact that they did not protect their margin.
Tracking costs and progress
Reduce inefficiency and downtime with materials progress tracking at each stage to assist in better planning. Early warning potential issues and having regular discussion with project stakeholders including adjustment to budget where needed.
Finding ways to improve productivity and reducing waste.
Therefore, constant monitoring of costs and progress and comparing actuals costs versus budgeted allowance is significant.
Good record keeping is paramount for a successful project.