Improving Profits on Construction Contracts

Improving Profits on Construction Contracts

Improving Profits on Construction Contracts

Construction firms are always looking for ways to cut costs while delivering value and improving profits. However, in a competitive market, this is no easy task. Fortunately, there are many tried and true ways for firms to improve profits that do not require too much radical change. There are a few ways, in particular, that should be remembered.

1. Prefabrication

The use of prefab materials used to be a dirty word in the industry. However, this has started to evolve over time. Prefabrication eliminates the repetitive tasks on site and reduces the cost of labor dramatically. So even if the sum of the materials is greater, the overall cost of the project will go down. Studies have even shown that using prefab materials actually leads to increased quality because of standardization.

2. Checklists

It might be too simple but checklists actually make a major difference. Require foreman, site managers, machinists and tradesman to all use checklists at the beginning and end of the day. Not only will the keep track of what they have to do, they will do it in order and accomplish more. Productivity will increase and mistakes will decrease.

3. Adopt Industry Leading Software Solutions

There has been amazing innovation in new software solutions for the construction industry. These improve efficiency and increase profits substantially. There are a few which are especially important:

PlanGrid: This tool allows teams to dynamically collaborate on RFPs, drawings, blueprints, photos and other documents.

Kahua: This software is a leading project management tool that helps everyone closely stay on the same page throughout the process. It can also integrate original documentation like those created in PlanGrid.

Red Team Cloud Construction Storage: Storing and accessing information is always an important issue when teams are operating independently. Red Team safely stores everything in the cloud so individuals can safely and quickly access the data they need when they need it.

4. Shorter and More Clear Cut Projects

The all-encompassing projects are great because they have a high value. Unfortunately, these often come with many caveats and legal carve-outs. When targets are not hit, there are disputes which lead to excessive legal costs and penalty fees. That dramatically reduces profits. Sometimes it makes sense to take many smaller, simpler sub-contracting profits where the work responsibility and the fee are extremely clear-cut. Your team can get in and out of these projects without any legal hassle or penalties for missed deadlines. That also increases profitability.

5. Managing and Utilizing Data

The big data revolution has already changed many industries including retail, finance, manufacturing, and technology. Construction project managers are now utilizing data to increase productivity and income through various means.

Firstly, they are integrating environmental and historical project data into their models when creating project estimates. That effects the time of construction, the costs for construction and overall productivity.

Secondly, they are using real-time data to calibrate machines to better fit the needs of the project. For example, data can be used to align the construction of two separate components to be completed at the same time. That way they do not lie idle waiting to be put together. Reduced downtime means reduced clean up costs and improved efficiency.

Lastly, firms are using data to measure their workers. Do they truly have the most efficient labor or are there better options? Keeping track of this information helps people alter their habits over time or lets the manager know to recruit new workers.


Overall, there are many pieces of low-hanging fruit for construction projects to be improved. While the introduction of technology is a key to making large strides, simple actions like using checklists are also helpful. Keep these ideas in mind when considering ways to improve construction contracts.