Labour overruns can kill gains faster than anything else. Chris shared an example of a fabrication project that required 1,000 labour hours across ten tasks. Nine tasks were under budget, but one took 80 extra hours—completely wiping out the project’s profit.
Chris Walsh puts it:
“That 80 hours was profit that could have been in the owner’s back pocket. We analysed why it happened and found that the wrong person had been assigned and they lacked the right skill set. The company should have outsourced that part of the job, but without proper tracking, they didn’t see the issue until it was too late.”
Most businesses start with estimates when quoting jobs, but how often do they compare those estimates to actual costs? You always eat into your margins if you underestimate labor, materials, or overhead.
Tony Harcourt explains:
“Optimism in quoting is a real issue. We always underestimate how long a task will take, and without tracking that reality, we keep making the same mistake.”
A fabrication company noticed that they consistently underestimated how long welding took by about 20%. After looking into their past jobs, they updated their quoting process and immediately saw a 15% boost in profit margins.
Chris Walsh adds:
“I reviewed a company’s financials, and they were running projects worth hundreds of thousands of dollars on spreadsheets. The numbers didn’t match because different teams were tracking costs differently. When we tried to verify if they were making a profit, we couldn’t. They were essentially flying blind.”