If you’re wondering why you aren’t making money on projects, you may need to take a look at your job cost reports. Are you quoting less hours than it took or exceeding your material quote? The closer you look at the good, bad and the ugly of a project, the better you can adjust to make your estimating process more effective and your profit greater.
Here are two key places to pay attention when evaluating past job cost reports.
- Materials. Look for expenses you incurred on a project that you did not originally budget for. Twenty dollars here and $50 there adds up a lot over the course of a project. See if there are any trends in these expenses based on the kind of project and update your estimates accordingly.
- Labor Hours. Calculate the labor hours spent on each project and see how they differ in what you expected vs. the actual amount. What factors were involved? How can you encourage or incentivize your team to work more efficiently to increase your gross profit?
By evaluating a number of your project cost reports you can begin to see where your estimates are falling short. Revamping your estimating process with your sales staff to include these additional expenses will go a long way to improving your bottom line.
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