Budgeting and Estimating

Estimates and Budgets for construction contractors simplified through software

Proper budgets and estimates

If your commercial construction contracting business is to survive, then you must be equipped to provide proper budgets and estimates. More importantly, if your construction business is to be profitable, then having budgeting and estimating skills in place is essential.

Develop a total project budget

Developing a project budget includes:

  • Analyzing requirements and drawings to verify the scope
  • Determining cost and time parameters
  • Allocating enough for contingencies and cost escalation

Moreover, once the project is underway, the budget allows you to:

  • Remain vigilant concerning variances
  • Make decisions based on actual costs

Therefore, using a project budget establishes useful guidelines for completing profitable jobs.

Benefits of proper budgets and estimates

While there are some easily spotted benefits to using proper budgets and estimates such as:

  • Avoiding inaccurate bids
  • Curtailing the constant use of change orders
  • Collecting sound financial information on which to base decisions

There are other benefits which are less easy to measure, for example:

  • Realizing a greater ability to make continuous improvements and anticipate problems
  • Growing an improved sense of clarity and focus
  • Achieving more confidence in your decision-making

Estimating – the cornerstone of construction projects

Accurate cost estimation is critical for creating and maintaining a feasible budget for construction project costs.

Estimating is the process of evaluating or calculating the amounts of material, labor, and equipment necessary to complete a project. Therefore, it becomes the cornerstone upon which all else rests. Above all, getting project budgets right and controlling costs is essential to project success.

And, like any other phase of construction contracting, having the right tool for the job makes the difference. Thanks to technology, estimating has been dramatically simplified and streamlined.

Knowify makes it easy

The team here at Schulte and Schulte knows, uses, and recommends the use of the software developed by Knowify. They provide a step-by-step process which moves from bidding, to the proposal, to billing.

In no order, I’ve listed a few of the features or functions construction contractors note they can apply when using the system developed by Knowify.

  • Labor costs tracked precisely
  • Avoid missing items when invoicing
  • Change orders sent and approved quickly
  • Monitor the profitability of each current job
  • Better track materials
  • Better organization of invoice tracking and employee productivity
  • 2-way sync with QuickBooks
  • Ability to create AIA style billings

Moreover, one contractor said Knowify is a “one-stop-shop for estimating, time-tracking, invoicing, and scheduling.”

To sum it up, Knowify helps build a budgeting plan, measures results, and improves overall operations.

 

We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers. 

Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs! Call us 866-629-7735

Getting Your Construction Company Ready for Company

You know the story. Company’s coming – we need to get this place straightened up!

Truth is, when guests are on their way, getting the “stuff” picked up isn’t much of a problem if there are already systems and routines in place. If like-items are stored in appropriate use-ready places, if each family member knows what his assignment is, if the place is simply cluttered as opposed to being in a state of filth, you can probably nail it in less than an hour.

But, what if your home is in a “state of filth?” What if you have company coming in only an hour?

Is your construction business ready for “company?”

Put another way – Do you have an exit plan? Are you preparing now for that day? Because you know as well as I do, some day “company” will arrive – will you be ready?

There are some construction contracting or service businesses which could be ready for company at the drop of a hat and others which wouldn’t be ready no matter how much notice they were given.

The process of getting your business “ready for company” necessitates the business practices and procedures that maximize the return from your construction contracting firm.

Let’s talk basics

You’ll have to implement best practices for construction business planning which at the very least includes:

  • management
  • operations
  • finances
  • marketing

A solid plan means you will have created operations manuals or their equivalent, and will have at minimum one training center. You’ll be able to document and implement your industry’s best practices, procedures, and systems.

Let’s talk about your job

There are two major jobs you, the owner, need to concern yourself with and they are –  creating career opportunities for your team and building a company that runs without you. Perhaps the greatest task you’ll face is to make yourself DISPENSABLE.

Let’s talk business financials

Knowing your exit plan will have you looking at your business financials in a whole new light. A few of the things you’ll see with better clarity are:

  • Having a budget in place
  • Understanding your accountability to employees
  • Determining to increase revenue, manage costs, and direct overhead spending
  • Organizing and measuring your rise to more profit

We can help.  480-442-4032 or Toll Free: 866-629-7735

Build a foundation for financing options – Think expansion

This is part three in a five-part series concerning Steps to Scaling Your Construction Contracting Business. You can see the introduction to the series by clicking here.

Because you aren’t likely to be a trust fund baby, chances are great you’ll need to find a financing option to grow, expand, or scale your construction contracting business sooner or later.

And, if you need an infusion of cash “like yesterday” there are alternatives for finding folks who will help finance your business “like today.” But, if you’re willing to prepare now for future growth and expansion your opportunities for receiving better or more favorable terms are greatly increased.

With that said, now is the time to begin getting your ducks in a row.

Down to brass tacks

The folks who will consider loaning to you will be concerned with:

  • How long you’ve owned your construction contracting business
  • Your personal credit scores
  • The gross annual revenues for your business
  • Your businesses net annual profits
  • Whether or not you have collateral to back the loan

Ask yourself some questions

The initial part of the process will be understanding the kind of capital you need to support growth for your business. You’ll need to ask questions like:

  • How much?
  • When?
  • What for? (Whether you need the funds for payroll, materials, or equipment will likely affect not only your ability to find financing at all, it will also play a role in the rate of interest you’ll have to pay.)

More hard-hitting questions

No matter how much you need to borrow or how you’ll use the funds, there are other things to consider before applying for a loan.

  • What will the total cost be to repay? (principal, fees, interest)
  • How long will it take to repay?
  • What will be the amount of the monthly payments?
  • If you pay late or default, what will the penalty be?
  • What impact will the loan have on your total financial package?
  • Are you willing to put in the time to do the back-office stuff in order to get better rates or terms?

An excellent article from Purch, written by Karina Fabian, and titled Financing Your Construction Business clues you into an array of options available, including alternative lenders. Near the bottom of the article, Fabian gives a list of documents you’ll need to have ready when applying. Getting these documents together will likely take time and persistence, yet preparing now (before you need the funds) will pay off in the long run.

Your call to action:

Get your budget set up and rolling. Take the necessary steps to be sure your credit scores are the best they can be. Be sure your accounting records are up to date and clear. Begin compiling the documents suggested by Fabian.