Tips for Making a Project Profitable

As a construction contractor, you’re likely committed to growing your business over the years and increasing the size of your customer base.

To do this, maximizing your profits when completing projects on behalf of your business is of great importance. Here are some very useful tips in this regard!

How to make a project profitable

Source: Canva

Maintain communication with the customer

Throughout the project, it’s essential to maintain good communication with the client. While this point may seem obvious, our thinking needs to be clarified.

Indeed, it’s possible that certain dates must be respected to confirm the material, colour or coating choices. By the same token, it would be preferable to allow a certain response time so that the customer will have enough time to make an informed decision and not have to make choices at the last minute. If they want to think things over before confirming any additional expenses, it’s possible you’ll be delayed in the pursuit.

Check in often

As it’s often said, time is money! In the case of a renovation project, reducing your lead times as much as possible is therefore necessary. In order to achieve a certain pace, it’s important to have an effective quality control system in place.

When verifications are made at specific times during a project, errors that require repeating one or more stages of the project are reduced. This makes it possible to quickly correct as needed and speed up the progress of the project.

Quite naturally, we may tend to trust one another and not want to “waste time” performing multiple quality checks. With many years of experience under the belt, it’s true that one might think they’re safe from making mistakes. Nevertheless, mistakes are only human and a distraction can quickly occur. So, it’s better to take a little time to check in than to waste a lot of time going over parts of a project.

As you already know, resuming one or more steps is not without financial consequences: more materials, more manpower and thus, a shrinking profit margin.

Have a precise and detailed contract

It’s commonly recommended that homeowners who have renovation projects done on their property make sure to have a clear and precise contract in hand. This advice is just as relevant for contractors! Indeed, a well-written contract offering precise detailing of the work to be carried out and the materials to be used helps to avoid any gray area.

As you can imagine, this can be a source of conflict with a client. They may interpret a clause in one way and you in another. As it will be necessary to resolve any misunderstanding before proceeding with the project in question, you’ll lengthen its duration unnecessarily. Getting everything straight from the start and being on the same page will avoid expensive tune-ups!

The availability of materials and subcontractors

You’re well aware of how important project planning is to how it will unfold. As it may take some time to manufacture the items needed to complete the project, it’s essential to order these as quickly as possible. Without them, you’ll be delayed in the progress of the work!

If you’re using subcontractors as part of a renovation project, be sure to determine exactly when they can be on site. This way, you’ll avoid a shortage of qualified labor when their presence requires them to perform expert tasks. A few weeks before the start of the project, a brief reminder to confirm everyone's presence is also advisable to avoid having to find a last-minute replacement.

Unscheduled work: what profit margin?

Sometimes work that wasn’t originally planned may be necessary. How do you deal with this unforeseen situation? It must be recognized that it’s delicate for several reasons. First, you don't want to do this work without being able to make a reasonable profit for the additional work these extra tasks bring. It’s likely the customer will want to respect their budget or spend less, rather than go over budget.

In order to avoid letting endless negotiations go on, diplomacy and the willingness to make certain compromises will be required. Therefore, it’s relevant to determine the costs relating to this addition so as to respect the same profit margin that was established by the contract.

Remember, a client reluctant to pay might decide to take a long time to think it over. While you can work on other things while you wait for the discussion to progress, you’ll be putting off a task that should be dealt with as soon as possible.