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Tips to help construction businesses control costs and improve profits


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Construction organizations are looking for ways to cut costs, become more efficient and exit unprofitable services or products – but depending on the approach, these actions can sacrifice long-term goals and potential rewards.

Ad hoc cost-cutting often erodes morale, damages a company's reputation and degrades infrastructure. By contrast, implementing a disciplined, enterprise-wide profit improvement initiative in your construction company is a practical way to improve financial results and build a sustainable culture of cost consciousness.

A successful profit improvement program begins at the top. The executive team must be focused on the bottom line and ready for change. Everyone must truly understand the strategic direction of the company and the respective drivers of costs within the organization. Strategic planning begins with an upfront situational analysis. It is imperative for the executive team to have a heavy dose of appropriate data in order to make informed decisions. Coming out of the strategic planning meeting, the team should have a clear understanding of how to align tangible and intangible resources to drive customer value and positively affect the bottom line.

This type of program is a holistic and programmatic way of developing a cross-functional team to "own" a number of initiatives targeted at improving profit and cash flow within the company. A critical step is to gain support across your construction organization for the cost-cutting initiatives and create a culture of cost consciousness. For effective implementation, accountability for achieving established financial targets must be in place, and the proper identification and reporting of key measurements must be made available to the executive team to ensure that the programs are proceeding as planned.

In difficult economic times, many construction companies are under immense pressure to adapt their operations in order to improve their bottom line. However, companies that make significant decisions without first building the necessary strategic foundation and structured disciplined approach may do more harm than good.

By carefully evaluating the significant financial and operational drivers and implementing a systematic approach to improving financial results, construction organizations can realize an enhanced bottom line to achieve their near- and long-term strategic financial goals.

Read our white paper, Tips to help construction businesses control costs and improve profits, for a more in-depth look at how to control costs without sacrificing long-term goals and rewards.


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