5 Avoidable Profitability Killers for Subcontractors

5 Avoidable Profitability Killers for Subcontractors

In today’s fast-paced world, there are many aspects of the construction industry that subcontractors need to continually stay apprised of to increase profitability. Fortunately, thanks to modern technology it is possible for subcontractors to avoid known ‘profitability killers’ by using innovative construction software applications to keep entire teams of contractors on board with what’s going on with every current project. These incredible tools can help subcontractors avoid these five profitability killers and ultimately have a positive financial impact on the business.


Crossed Communications

Depending on the nature of the construction project, there may be hundreds of site workers, architects, investors, etc. that need to communicate information en masse for the project to succeed. By streamlining communications between these parties, subcontractors can increase profitability on projects. Using construction software is an easy way to centralize all communications such as emails, important documents, and project reports.

These communications are stored and organized in a secure database that also allows for real-time updates for spot-on accuracy at all times. Improving communications between subcontractors and involved parties will also increase productivity, which also improves profitability overall.


Low Productivity


Both the productivity of equipment and workers is essential to keeping any project on budget and on schedule. By automating a number of processes such as requests for information (RFIs), purchase orders, job assignments, accounting, etc. workers will spend less time pushing paper and more time on the site being productive.

Another productivity booster is to ensure that every team member is performing their duties to the fullest of the abilities and that work consistently meets job specs. This means that site managers need to stay apprised of each employees job performance and their strengths and weaknesses. Using construction software can help boost productivity in all of these aspects by making each document and report available anytime, anywhere.


Incorrect Purchase Orders and Low Estimates Kill Profitability


Connectivity is vital in the construction industry. There are countless invoices and purchase orders to keep track of during any construction project, making comparing actual billing prices to original purchase orders challenging. Using construction software simplifies the process of completing and confirming purchase orders and helps ensure that project estimates are accurate. Construction software automatically fills in the data and integrates it with correlating documents for quick comparisons and review. Not only do subcontractors want to make sure no billing shortages are occurring, but it’s important not to overcharge customers to keep their business.

Accuracy is also vital when it comes to project estimates. Not only must the estimate take into account fixed cost such as equipment and labor, but one must factor in any possible variables like materials, weather delays, and other contingencies. Innovative software solutions for subcontractors streamlines the estimation process by calculating labor costs according to how long each task can take while also giving accurate estimates concerning materials. Accurate purchase orders and estimates will certainly boost profitability, but one mistake could result in project delays that may lead to a financial disaster.


Poor Employee Training and Lack of Incentives


The key to productivity that boosts profitability is making sure that all employees are properly trained, are performing up to expectations and that there are incentives in place to reward deserving staff. Subcontractors can easily use construction software apps to keep track of employee training and performance and make it available across the entire network. Regardless of who the site manager is or the location, every employee can be held accountable for their performance. This network also allows management to arrange for additional training courses or refresher classes if it is noted that the staff seems ill-prepared for certain tasks during projects.

The hiring and training process can be costly, so it’s essential to ensure that employees enjoy a certain level of job satisfaction. This is especially important for younger employees, especially Millennials. A system can be set up in a way that notifies management of any staff feedback in addition to letting them know when staff has reached set performance goals. Set work incentives in construction are strong motivators for all employees and can help keep them on board with the company longer which boosts profitability, performance, and employee satisfaction.


Undefined Project Goals


One of the biggest profitability killers in construction is not having clearly defined company and project goals. Companies must always be forward thinking and consider both short and long-term goals when assessing the ‘bigger picture.’ A solid strategy and business plan should be established long before breaking ground on a project with owners, management, investors and key staff all being essential in the planning process. With shared goals and a set plan, every project will progress more smoothly and is far more likely to stay on budget.

With an integrated plan prepared, using construction software to pass along this information to the entire workforce or essential parties can make sure that everyone is on the same page. Expectations, goals, time sheets, design plans, project notes, purchase orders and much more will be available immediately and can be automatically updated by authorized parties if situations change. This is a huge time saver and prevents confusion and errors that can cut deeply into a project’s profitability.


Kris Lindahl is a nationally recognized innovator in real estate, marketing, leadership and community involvement. In 2014, he was Minnesota’s #1 real estate agent as ranked by Real Trends. In 2017, the Kris Lindahl Team rose to become one of America’s top real estate teams. And in May 2018, he fully embraced his own real estate model to form Kris Lindahl Real Estate, Minnesota’s premier independent real estate agency.