Managing a construction business is more than just completing projects. It’s about handling every part of the process, from finding new leads to finishing projects on time and within budget. If one area slips, it can throw everything else off balance, no matter how good you are at the rest.
Let's get to the nitty gritty of the important areas to keep your construction business management running smoothly.
Essentials of Construction Business Management
Managing a construction business involves several important tasks that all need to work together. These include:
- Lead Management: It is crucial to keep your pipeline full. This means tracking potential projects, scheduling site visits, and ensuring clear and consistent client communication.
- Quoting and Estimating: Accurate quotes are crucial. Overpricing can cost you jobs, while underpricing hurts profits.
For example, when quoting for a demolition task, ensure the estimated hours are realistic. If you budget 10 hours but the task takes 30, you’ll immediately know something went wrong and need to adjust your approach in future quotes.
- Project Management: This covers everything from scheduling and task tracking to managing unexpected changes during a project. Tools like job management software for construction can simplify these processes and save time.
- Costing and Time Tracking: Staying on top of costs and time is essential to keep your projects profitable.
For instance, track every task and completion time, like plastering or electrical work. This level of detail helps you spot where time is lost and where costs might be creeping up unexpectedly.
- Invoicing and Retentions: Getting paid on time and handling retentions properly ensures your cash flow stays healthy.
These areas are all connected, so neglecting one can impact your entire business.
The Lifecycle of a Construction Project: From Lead to Completion
No matter how big or small your business is, the basic process remains the same: you start with leads, move on to quoting, and then manage the project through to completion. Here’s how to handle each stage effectively:
1. Leads
The first step is managing your leads. Whether it’s a big tender or a small job, tracking these opportunities in your job management system is crucial.
Document each lead, manage activities like site inspections, and keep all communications and documents in one place. This sets the stage for a well-organized project.
2. Quoting and Estimating
Accuracy in quoting is key. Whether you’re using detailed plans or cost-plus methods, ensure your estimates are as close to the actual costs as possible.
Don’t forget to include a margin for unexpected events—things rarely go exactly as planned in construction.
Always
attach clear terms and conditions to your quotes to protect yourself from any surprises down the line.
3. Projects
Once a project is underway, you need to monitor it closely. Use Gantt charts or Kanban boards to track progress and manage timelines.
Monitoring project status, schedules, and financials helps you make informed decisions and keep everything on track.
4. Invoicing
Don’t wait until the end of the month to invoice. Send out the invoice as soon as a task or milestone is completed.
If you finish a task on the 15th, invoice immediately to avoid waiting 60+ days for payment, which could strain your cash flow. This keeps your cash flow steady and avoids long delays in getting paid, which is critical in construction business management.
5. Variations
Variations are a part of construction projects. Manage them well to maintain profitability. For instance, if you encounter unexpected conditions like clay instead of soil, which increases the time needed to drill piles, submit a variation to your client.
Always quote for variations and get approval before moving forward. This way, you’re not doing extra work for free.
Financial Management: The Backbone of Your Business
Keeping your finances in check is crucial for the success of your construction business. Here’s how to stay on top of it:
- Time Tracking: Accurate time tracking is non-negotiable. Whether through timesheets or real-time updates, knowing who did what and when is essential for managing costs and timelines.
- Cost Control: Effective cost control means constantly comparing your forecasts with actuals. This helps you stay within budget and avoid surprises.
Work in Progress (WIP) Reporting: Why It Matters
Work-in-progress (WIP) reporting can be tricky, but it’s essential for accurate financial reporting. Decide how you want to report WIP on your financial statements, whether based on costs incurred or the value of work done.
Imagine you’ve completed work that hasn’t yet been invoiced. You need to decide if you’ll report this based on the cost of the work or its value.
Consistency is key, so agree on a method with your financial team and stick to it.
Using Technology to Streamline Project Management
Technology manages construction projects much easier.
Job management software like WorkGuru can significantly reduce the time spent on administrative tasks, giving you more time to focus on the work that matters. Real-time data and dashboards provide the information you need to make quick, informed decisions, saving you hours of manual work.
Integrating Financial Systems for Better Efficiency
Using accounting software like
Xero alongside WorkGuru eliminates the need for double entry, reducing the risk of mistakes and saving time. If you’re entering data twice, you’re wasting time and increasing the chance of errors.
WorkGuru: A Smart Choice for Construction Management
WorkGuru is designed to fit your work style but is also about being open to change. Adopting new technology often requires adjusting your workflow, but those adjustments can lead to big improvements in efficiency and profitability.
Work with partners who can help you get the most out of WorkGuru, and be willing to change your processes to fully benefit from the system.
To see how
WorkGuru can streamline your construction projects, watch our overview tutorial video below.
