639: Pillar 3 - Delivering Construction Projects Profitably

This Podcast Is Episode 639, And It's About Pillar 3: Delivering Construction Projects Profitably

A Construction Bookkeeper's Guide to Smarter Production for Small Contractors

You've done the hard work: marketed your services, landed the job, and priced it to make a solid profit. But here's where a lot of small construction businesses lose money—even after doing everything right up to this point.

 

That moment is project execution—or what we in the business world call production.

 

As construction bookkeeping specialists, we've seen many jobs transition from profitable to painful simply because the contractor lacked systems in place to track costs, manage scope, or control labor once the work commenced.

 

Let's discuss Pillar 3: Delivering Projects Profitably, and how refining your production process can safeguard your profits, enhance your reputation, and alleviate stress. 

 

Why "Doing the Work" Isn't Enough

Many contractors assume that once the job starts, the hard part is over. But production is where the majority of the risk lives:

• Labor costs can balloon
• Materials may get wasted or delayed
• Clients can change their minds mid-project
• Subcontractors may not show up when they're supposed to
• Scope creep can kill your margins without you realizing it

From a bookkeeper's point of view, this is when the numbers begin to go awry.

Profitability doesn't just come from winning jobs—it comes from controlling how they're delivered.

What "Delivering Profitably" Actually Means

To deliver projects profitably, you need to finish the job:

• On budget
• On schedule
• With the client happy enough to pay (and refer you)

It's not just about good craftsmanship. It's about project management. Whether you're a solo operator or have a small team, production needs structure. Fortunately, it doesn't need to be complicated.

Where Small Contractors Lose Profit During Production

Before we dive into solutions, let's look at where money is most often lost on the job site:

1. Untracked Labor

If you don't know how many hours you or your crew are spending on a job, you can't compare it to your estimate. It's one of the most common profit-killers we see in the books.

2. Material Overruns

Materials get lost, over-ordered, or wasted—especially if you're not reconciling purchases to job estimates.

3. Unbilled Change Orders

Clients often add or alter project elements. If those changes aren't documented and billed, you're giving away free work.

4. Delays and Downtime

Time is money. Waiting on materials, subs, or client decisions can derail your schedule and cost you future jobs.

5. Scope Creep

"Can you just add this one little thing?" becomes a margin-eating monster when not adequately managed.

Now, let's talk about how to prevent those losses and protect your bottom line.

7 Ways to Deliver Projects More Profitably

1. Start with a Clear Scope and Signed Agreement

It may sound simple, but many contractors begin work without a detailed, signed agreement. You need:

• A detailed sc