To keep up with the current landscape of business, technology needs to be in the forefront. Operational systems in place are done efficiently through technology. We have had a lot of talks on how we control costs, and how we have monitored profits, however, cost management in the current technological error can be more strategic.

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 our previous blog post, we lightly covered the steps taken for managing costs and how technology can help at every step of the way. Today, we want to discuss specifically how technology can help efficiency in the cost management of projects.

A Customer Relations Management (CRM) tool helps this from end to end. Working with a bookkeeper and an accountant can make you understand what your overhead is. An evaluation of indirect and direct costs can help with an accurate markup. These percentages help with what needs to be added to each job. 

When creating estimates in your CRM, it is easier than ever to automate the percentages into each job through a CRM. While the job is taking place, every cost can be entered immediately into a CRM. With every finalized job, each payment can be entered immediately. Each check received can be entered immediately to close the job. These actions can now be done in due time, and the data and numbers that can be analyzed immediately after a job help efficiency. 
 

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. 

When said analysis of a job can be done immediately, this helps to make adjustments quicker. The next job can have the necessary ratifications done efficiently and effectively.

Efficiency in cost management would follow and none of this would take place without the necessary technology. Data of profit margins and costs throughout jobs in a quarter or half or full year even, can be seen in a more concise manner through the correct usage of technology. Trusting the effectiveness of these tools and adapting to your surroundings is vital for the development of your organization.