If you work in the UK construction industry, you might be aware that the profit margins are incredibly low. However, did you know that at 3%, they’re among the lowest in the world?
With this in mind, businesses may struggle to improve their profitability without strong guidance and effective strategies for sustainable growth. If you’re having difficulties maximising profitability, here are some great methods you can use.
Accurate project estimation and bidding
It can be tempting to offer lower project estimations in a bid to win the project. In an industry with so many potential competitors, cutting the cost to the consumer can help make an impact and earn you the job, however, this can quickly lead to under-pricing projects. In turn, you may overrun the budget and into your profit margins even further.
Instead, accurately pricing your project from the start can help prevent underpricing your projects. To take it one step further, break down the expected costs for each area, including materials, labour, and anything else the project may require. You may find that showing your customer this breakdown helps them understand where exactly their money is going, and could help secure you the project.
Implementing advanced project management practices
Adopting project management techniques can also help you to improve efficiency, reduce delays, and control costs. For instance, it can be a good idea to plan for issues to arise ahead of time. This can help keep you prepared if a problem does occur and lets you tackle it quickly and efficiently.
Additionally, effective delegation can ensure the completion of multiple areas simultaneously, accelerating a job’s completion time and improving your profitability.
Enhancing workforce productivity
Of course, one way to reduce the cost of labour is to boost your workforce’s productivity. Getting your team to work more effectively means they can deliver the same quality in a shorter time frame, but this can be difficult to achieve.
That’s why we recommend fostering a positive work environment. Offering performance incentives and investing in training are two brilliant ways that you can improve the work environment, especially since this can help your team feel more appreciated.
Leveraging digital transformation
You may want to further streamline your operations by embracing digital tools and technologies. Using cloud-based construction software can support task management, budgeting, and scheduling. This can help you and your team stay on track, as tasks can be updated for everyone once they’re completed.
With budgeting, it can also help you see where your expenses are climbing, allowing you to find a more cost-effective solution.
Engaging business growth consultants for strategic expansion
Ultimately, growing a business yourself without expert knowledge can be extremely challenging. Relying on an experienced business growth consultant, especially one who understands the construction industry, can provide tailored strategies for scaling your operations, entering new markets, and enhancing overall business performance.
This then reduces the pressure for you to create a successful development plan and instead lets you focus on running the business with a new focus on growth and improvement.