Controlling project expenses is difficult and as we have previously covered, it will almost never be perfect to do many unforeseen issues that can arise. The goal is profit and sustaining profits, and in order to do this effectively, there need to be consistent monitoring and analyzing of costs. We went over risk analysis in the last blog and this would apply as well. However, to really be most effective and efficient, you want to focus on job costs to really control and track expenses. 

Ensuring you are calculating the Markup of a job and the Profit Margin desired for a job accurately can be the difference in both how much money you leave on the table when quoting a job and how much money you lose when quoting a job.

In any construction project, whether it be Roofing, Siding, Bricking or landscaping, needs to be specific categories in which expenses are listed. For example, labor, materials and equipment would fit with everything. If there are multiple jobs being done within the project, then this would be cut down further into the specific job. This is the best way to track your project expenses in regard to what your estimate might have been. Mitigating risks and continuing on this path will allow for more control and more precision with the projects. 

There are a lot of other ways to do this; adding labor and materials together, or adding costs and multiplying this by a square footage is the easiest and quickest way to get a quote.

This, however, leads to miscalculating things that should be looked at in a concise and more uniform manner. Someone who is remodeling the exterior of their home, for example, should be separating the roof, windows, soffit/fascia, gutters and siding. Within each, you will then separate materials, labor and equipment needed to control each expense within each job. This can lead to sustainability in your profits. 

If you read the previous blog, we breakdown what a Markup and Profit Margin Percentage looks like on a job. What we want to focus on today is on the formula used when you know your target markup. If you know that your target mark up percentage is 30% for example, then calculating this will be different than the previous blog. If you your job cost is $1000 and your target mark up for the job is 30% than the following will be used to calculate your job cost: $1000 x (1 + 30%) = $1300. We understand this is an easy one that you construction owners know off the top of your head, but the importance is the calculation.