How to Protect Your Construction Business Revenue During Budget Restrained COVID-19 Environment?
By: Scarlett Jonathon
Tags: Construction, Construction Management, Construction Industry, Accounting Software, Accounting

The Present Scenario of the Construction Industry

Though the effect of COVID-19 has started to slow down, the long-hauled impact it has created on the construction industry is still persistent. From project owners to contractors, subcontractors, and project managers, all have faced the reduced cash flow adding more pressure to the projects.

Since the safety requirements have become stricter than ever, there has been a significant decline in the labor supply along with the shortage of material which has pushed the material pricing to cut down the profits.

Adding to this, contractors and construction firms have started spending more money on safety essentials such as masks, gloves, sanitizers, and other products. Also, the loss of labor has made even the simplest tasks consume more time adding to the time required to complete the projects.

As most of the manufacturing plants were restricted to function due to safety aspects, the material shortage has become another obstruction to the project’s success. The restriction on imports, cost of logistics, and delays have all caused damage to the revenue-making many contractors and construction companies to struggle for survival.

Tighter Budget & Project Managers

Even though contractors are taking maximum efforts to protect the cash flow, there has been significant pressure on the project managers to control the project budgets while generating profits.

As project managers must take the responsibility for driving profit percentage, it has become even more difficult for them to sustain through these tough times. Therefore, contractors are looking forward to technology solutions that can help yield profit even from tighter budgets.

Project managers have the responsibility of maintaining the profit percentage by keeping track of the variance with project finances, which may be difficult at times. However, planning your goals with the right techniques could prove to be beneficial in yielding profits from tighter margins.

Planning Cash Flow Projections & Job Forecasting

The primary step which project managers need to take for the project’s success is planning cash flow projections as it helps contractors to locate the income source while defining the budget for the essential expenses.

Moreover, it is necessary that project managers should keep a check on operational costs while working on material and equipment purchases. It can help project managers have visible trends for cash flow. Also, the data can be used to work on the job forecasting process for existing and future projects while measuring profits, loss, and average income required for planning expenses or checking possible loan requirements to complete the project.

Measuring Estimated Time for Completion

When it comes to sustaining profit margin, project managers must have a keen observation of the estimated completion time for projects. This can either be done using construction accounting software which can check on true costs and time spent on a particular activity as well as the entire project.

Also, determining true costs even includes project managers to check for change order data such as labor, material, and subcontract data which can help filter profits from the expenses. And to meet such goals, contractors can switch to construction project management software that is designed to automate the recording of all the expenses, checking time for completion, and cutting any chances of unexpected loss due to delays.

Adding to that, the data determined for estimated time for completion of a project and activity can be further used to plan the decisions for upcoming projects while generating the scope for improving the profit margins.

How to Sustain Healthier Profit Margins?

The entire process of sustaining the profit margins begins with the management of expenses, time management, and keeping a check on project budgets. Since project owners can hold contractors and project managers accountable for all the time and money consumed, contractors can simply switch to intelligent construction management software that can handle all the data related to accounting, ERP, CRM, and project management.

Also, using such technology can help project managers to have command over change orders while checking costs anticipated for change implementation, material planning changes, schedule adjustments, etc. This data can be used to create real-time progress reports while delivering access to more precise billings, invoices, progress reports, and

On top of this, using an integrated construction accounting software can be used to process real-time progress reports, drawing a more accurate picture of the variances in the job. Also, this can provide project owners easy access to progress details, invoices, and billings which can improve the entire payment process.

Overall, using a software solution can help project managers to stick to the right path of project progress while aligning with the budget and profit margins. This gives them easy access to expense management and allows timely project development while maintaining the transparency of the entire project.

The Crux

Though working on project planning, expenses, change orders, and profit management may all seem like an effortless process, the goal of the contractors is all about bringing precision to the deliveries.

Therefore, it is significantly important to keep track of project resources and business decisions to have a business advantage. Therefore, it is necessary that contractors must make the right choice when adopting a cloud-based integrated construction accounting software that can add to the profits while meeting the project goals.

Concluding it all, planning revenue and sustaining profit margin in a budget restrained environment is all about precision with estimated time completion, keeping a check on project trends, effective forecasting, and making sure that the project must head in the right direction with respect to time.

Good Luck!

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