Net Profits - Four Major Levers

Increasing net profits for contractors comes down to four major levers that can be pulled.

D. Brown Management Profile Picture
Share
Leadership Tools: Four Basic Profit Levers. Like operating a backhoe; use all four levers simultaneously.
  1. Increase quality revenue up to the point where it stretches your operational capacity.  Not revenue for the sake of revenue but revenue in alignment with your market strategy and capabilities.  Not stretching to the point of breaking but just enough to allow you to grow. 
  2. Increase the “Sold Margin” on projects by finding the customers that will pay the most for the capabilities that you have and by building capabilities that the market places a higher value upon like advanced preconstruction services
  3. Decrease the cost of building project through investments in talent, training, process streamlining, tools and technology.  
  4. Decrease the cost of overhead and indirects in both absolute dollars by looking at every cost and asking how it truly adds value to the customer.  Be careful not to “over-cut” and create a hollow organization that will impact future growth.  

All are interrelated and seem simple on the surface. 


A 3rd party perspective can be helpful for assessment and planning purposes




Jack Welch - Any Jerk Short-Term Earnings
The ultimate measure of a leader is how well their business unit performs AFTER they are gone. With the construction industry talent shortages leaders must focus on building other leaders at an accelerated rate just to maintain market position.
Principled Leadership Versus Prescriptive Direction
Where is your comfort zone? What are your tendencies? What's the right balance? Build more effective teams, projects, and construction business by understanding these differences in people and role requirements.
Building a Systems Development Team - Support
The need for support, training, and maintenance of developed systems should not be underestimated.