Jan 29, 2021
This Podcast Is Episode Number 404, And
It's About The Reason Why Some Construction Projects
Estimating and submitting
bids is one of the most stressful and nerve-wracking sides of your
construction business. It is essential to keep in mind that
"break-even" in the construction business is challenging to
calculate because most projects are one-of-a-kind custom jobs.
Proactive contractors have systems and cost libraries with
pre-priced assemblies for bidding, which works in conjunction
with Strategic Construction
provide management with progress invoicing, job costing, and job
With poor bookkeeping,
misguided judgment, and clerical errors come bad decisions on what
projects to bid on and not to bid on until eventually, you'll run
out of time and money. This is why some construction projects fail
or, worse, construction companies get bankrupt.
decides to have some work done, they get several bids from
competing contractors because they heard someone say a long time
There are two things
- Good / Fast /
Cheap - Choose
Cheap & Fast or Cheap & Slow! Expect the project to be late
and over budget!
costs - Taxes,
fuel, cell phones, nails, glue, and small parts are the same for
all contractors; no savings here.
- Labor -
Cheap labor makes mistakes and causes damage because they are
learning, by experience, on your project!
- Material - Price is King! So they buy and install cheap
Tools - Cheap tools take more time, and the
finished product may be hard on the eyes, but they have to cut
Trucks - Rickety old trucks and vans may
break down, which means the job may take longer, but costs have to
Office - They work out of their house or
truck; so-called no-overhead
Cheap Construction Manager - Biggest, "baddest" construction
worker. Also, the bill collector. Also acting as a "Working Project
Manager," which means the company is attempting to save money in
the short run and lose money in the long term. Assembling parts and
building something takes a "Tactile" mindset. Running a project is
"Strategic." Put another way, no man can serve two masters as he
will hate one and love the other, and the inevitable outcome is the
Peter Principle, which leads to a construction train
Invoices - Make no sense, the total cost may
exceed the bid, and you will pay the contractor to avoid
Warranty - Cheap contractors cannot afford
warranty work because they are "One-Hit-Wonders" never to
- Good / Fast /
Cheap - Choose
Good & Fast or Good & Slow! Expect the project was done on
time and on a budget!
costs - Taxes,
fuel, cell phones, nails, glue, and small hardware are the same for
Labor - Skilled labor costs more, produces
more work faster with fewer mistakes, which means a quality
Material - Quality and reputation are King!
Skilled labor can install quality material faster than cheap
Tools - Quality tools and equipment cost
more and produce a product that is easy on the eyes and lasts
Trucks - Reliable trucks and vans mean the
job is done quicker and with fewer delivery issues.
Office - Skilled staff and office equipment
provide for effective communication.
Qualified Construction Manager - Has a construction background and
formal training in project management. Most professional
construction companies with good reputations will have people with
credentials like PMP (Project Management Professional) assigned to
Invoices - Are Pay Applications that make sense
because they show a history of costs and payments
Warranty Work - This is a marketing cost because the
first project is the beginning of a relationship.
Never hire the lowest bidder.
The sweetness of low price fades quickly while the bitterness of
poor quality lingers on. When hiring a contractor, discard the low
bidder because you will get what you pay for and sometimes less
than what you paid for. See that you have enough time to review
subcontractor pricing and make clarifications from the project
manager, architect, or owner if there's anything you are unsure of.
This is where writing down a list and checking it twice will come
Sharie DeHart, QPA, is the co-founder of
Business Consulting And Accounting in Lynnwood, Washington.
She is the leading expert in managing outsourced construction
bookkeeping and accounting services companies and cash management
accounting for small construction companies across the USA. She
encourages Contractors and Construction Company Owners to stay
current on their tax obligations and offers insights on how to
manage the remaining cash flow to operate and grow their
construction company sales and profits so they can put more money
in the bank. Call 1-800-361-1770 or email@example.com