The construction sector recently has witnessed many changes in terms of site work, productivity and volatility. It has definitely become difficult for small contractors to find work given their daily commitments, which are quite overwhelming and hectic. These include the supervision of construction site, making deliveries, revisions of estimations, checking in with the cost estimating companies which are providing the estimating services and the monetary matters related to the suppliers and the sub-contractors. The list is quite lengthy.
Given all the details of the routine of the contractors, it is important to focus on the size of the projects that these contractors work on. Many of them undertake small projects and hence struggle with the number of projects. This gives them less profit margin and more and more revisions in terms of cutting costs and estimating it frequently. Therefore, here in this article, we are going to provide them with a guide on how to get more high value projects along with keeping their own profit margins in check with the help of construction cost estimating companies.
Comparison of Small and Large projects:
Attributes of small-scale projects:
1. Magnitude of the project:
Small projects mostly revolve around the ideas of renovation and interior buildouts and exteriors. Hence, it is difficult to grow the scale of this type of business. Also, it is difficult to focus on multiple projects at a time. This affects the productivity of the construction company.
2. Higher competition:
Given the magnitude of the small projects, more small contractors bid on these type of projects and hence the competition increases. This also reduces the prices due to the supply demand equation.
3. Preoccupied trades:
Many of the trades are occupied by the small contractors such as drywall, painting and flooring. Which solidifies the extent of competition in small construction projects?
Attributes of large-scale projects:
1. Easy to obtain credit line:
Higher profit margins in the large-scale projects make it easy for contractors to obtain the credit lines. This allows you to bid on and acquire the higher value projects where there is less competition and more margin for profit. The idea of focusing on 1 or 2 projects at a time also helps in this.
2. Not just about the size:
Larger projects have multiple stakeholders involved in the project. For example investors, planners, construction cost estimators, architects and suppliers. In addition, they require the services of architects for designs, zoning personals. They also have the construction estimators and building cost estimating companies at their disposal. This makes the profit margin more clearly along with reducing the risks of mistakes and failures.
3. Quantified cost and building estimations:
In the large-scale projects, cost estimators consider the size and scope of the project and make close approximations. Construction estimators balance both known and unknown factors to determine the closest actual end cost of the project. The abilities of building estimators are best implemented in such types of projects, which make more room for the best profit margins for the contractors.
Ways to get higher-value projects:
Now as we have figured out the significance of what we have to do, it is important to know how to do it. This is rather simple and risky at the same time but there are some calculated risks that are important to take on in the construction sector. To get there, following are the ways:
1. Enhance productivity through cost cutting:
The idea sounds a bit impractical but do not make assumptions just yet. Productivity can be increased by cutting the cost. You will have to use the services of building estimators and construction cost estimators. Reduction of as less as 1% can enhance the ability to bid more on larger construction projects.
2. Rent the equipment:
The need to buy equipment on your own has just not arrived yet. You can rent the required equipment. Reports have suggested that as many of as 60% of the construction sector rents the necessary equipment. Small construction companies can benefit more from this trait.
3. Bid on middle market projects as well:
While aiming for big projects, it is very important to keep an eye for those middle market projects that are going to preserve the profit margin for the company. This is a great way to enhance the bidding capability along with building a portfolio.
4. Rule out the possibility for mishaps:
It is important to prepare a database for cost estimating. By keeping accurate tabs on construction cost estimations, you will rule out the possibility of any potential errors that can put the reputation of your construction company at stake.
5. Take a leap of faith in terms of higher bids:
Don’t be afraid of taking risks when it comes to bidding on big projects. You can make them calculated by having an accurate bid estimate. For this purpose, gets quality construction estimating services to help with precise estimates.
This is all that you require for bidding on the large-scale projects. All that needs to be done include; an aim to take calculated risks, carefully established database of estimations, leap of faith and the services of a professional building cost estimators.
This is an important way to preserve the profit margins while acquiring the credit line to help with the finances.
It will not divide the focus among different small scale projects and will be executed in a better way.
It is high time that you upgrade your business to gain more benefits in the construction sector. The current circumstances are highly uncertain and require the immediate attention of the contractors that are aspiring to make their companies more successful.