Is your Construction project making money or losing money?
Several years ago, our monthly cost reports on one construction project showed we were losing money on concrete materials. The matter remained unresolved and the losses mounted. Furthermore, our progress was often held up due to a lack of cement.
With a little research, I found that we had paid $500,000 extra for cement - effectively we had paid $500,000 for cement we hadn't used! Further investigation revealed that the drivers of the cement trucks were discharging, and selling 30% of each load of cement before they ever reached the project.
Over several months the cement truck drivers had stolen half a million dollars of cement. This resulted in a shortage of cement because the project wasn’t receiving all the cement they were supposed to get, which delayed the project.
The above example illustrates the importance of monthly cost reports. Without them, these problems could have gone undetected. Forever.
But, cost reports are useful in other ways. For example, one company I worked at built several cooling towers, and each time we lost money. No matter how we priced or planned these projects we always lost money. We never seemed to have the right price or construction methods. We eventually decided we couldn’t make money on these projects and avoided pricing them again.
Sometimes we have to accept that we’re not particularly good at some construction projects and we should leave these projects to other contractors.
Why are construction project cost reports vital?
Monthly cost reports are useful for a number of reasons:
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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