Construction contractors can keep their businesses running efficiently and profitably by focusing on excelling in a few key areas. By making sure business aspects such as fleet management, safety, estimating and supply chain management are running smoothly, contractors can increase profits and improve business operations.
Vehicle Purchase and Maintenance
Finding the right vehicle for construction is vital. If a company doesn’t do the proper research, it’s possible to lose money and get stuck with a useless truck.
There are generally two options when it comes to business vehicles: lease or buy. While each one will get business moving and on the road, there’s much more to the decision-making process.
With a commercial truck lease, the vehicle can be used as needed, within certain regulations, during the lease period. The person or company leasing the vehicle to a business is responsible for most of the repairs and maintenance. With cost-effective and flexible solutions available for truck rentals, hauling anything and getting where business needs to go is easy.
In most cases, the terms of a commercial truck lease are between three and five years. Often, after the commercial truck lease is up, a contractor or business owner will have the option to purchase the truck instead of returning it. The purchase price of the truck will be for its residual value, which is determined in the original paperwork of the commercial truck lease. The idea is the purchase price of the truck would be less than buying it outright.
While searching for a vehicle, consider the following:
- gas consumption
- vehicle mileage
- high-risk versus low-risk vehicles
- regulatory requirements
- operating conditions
- tax options
Safety Guidelines
Don’t lose time and money because of skipped safety procedures. Employees need to know what is expected in regard to safety rules and regulations. Contractors can make sure of this by developing safety plans.
A safety plan should inform employees of expectations and what needs to be done on a day-to-day basis. Maintaining records of incidents will keep a business from failing later. A hurt employee hurts business.
In addition, a post visible guidelines on every jobsite and confirm those guidelines with each employee so they know what actions to take during times of emergency. If large machinery or heavy boxes are part of the job, having adequate measures in place is a must. Training workers in health and safety should be at the forefront of any team.
It’s important for all jobsites to have the following information and tools prominently on display.
- first aid kit
- emergency numbers
- guidelines with job-specific materials (how to lift heavy objects properly, safety precautions, etc.)
Under- or Over-Bidding Projects
Construction bidding is the process of submitting a proposal, or tender, to undertake. This also might involve bids to manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and materials required to build a product.
Tenders should not only display the unit cost per material and work, but should also break down labor, plant and/or material costs when possible. This way, the individual selecting the tender will be quite confident that the proposal is capable of being accomplished.
Note that bids are not chosen on cost alone. Sometimes contractors submit lower tenders to win the contract and achieve the work. Over-bidding is the opposite.
Problems arise when bidding is incorrectly handled. A contractor who wants to make a lower bid so they can get the work should keep company goals in mind. Maybe the contractor is counting on using less expensive subcontractors and materials. They might want to take more or less time to complete the work, or are planning on less supervision and communication than the others.
Understanding where future clients stand and the contractor’s value are important when deciding on a bid.
Subcontractor Risks
Taking time to look into a pre-qualification surety can help contractors who are looking for subcontractors to hire. A surety company can assist general contractors in qualifying a subcontractor by carefully evaluating them on basis of their underwriting criteria.
These specifications are used to determine whether a contract bond can be extended to the subcontractor. Some criteria include:
- financial strength
- credit history
- equipment
- management capability
Managing subcontractors needed for business requires decent procedures and contracts. Knowledge of the law and discipline to follow the processes that protect the contractor’s bottom line will improve outcome.
Supply Chain Strategies
When a supply chain is a well-oiled machine, it’s easier for companies to maintain and possibly increase revenue, resulting in higher profit margins. Using product and portfolio management software can help businesses produce products faster and more successfully, therefore attaining a higher profit.
Tightening a contractor’s supply chain will help leverage buying power and keep things simple. Maintaining strong partnerships with service providers and suppliers is important for supply chain effectiveness.
Keep relationships strong by partnering with as few outside companies as possible. Choosing the right people to do business with saves time and money.
