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Focus on the Construction Labor
Labor is the greatest risk factor and the greatest reward opportunity for construction contractors. 90% of projects that have cost overruns do so because of the labor cost of the job.
Specialty contractors will tell you it is the single greatest opportunity for them to make the most money. None of the other cost items compare, not material buyout, or subcontracting or equipment utilitization. It all starts with labor productivity.
Analyse an average labor intensive contractors profit and loss statement. Increase the labor productivity, the labor cost reduces and the labor savings go directly to the bottom line. Decrease the labor productivity, the labor costs increases and you might breakeven or worse.
Both specialty and general contractors benefit from a focus on labor. The reason is obvious for specialty contractors. They have a large part of there costs of any project dedicated to it. General Contractors benefit in that with good labor management practices they can reduce the prices of specialty contractors pricing as the fear of loss is lessen by these contractors.
For the complete article, please, email us at clientservices@stevensci.com and write "Construction Labor Article" or go to stevensci.com and click on forms page.
This and other management information are part of our 400+ page book published by McGraw-Hill Inc. "Managing a Construction Firm on Just 24 Hours a Day”. It includes 170 best Practices Used in Construction Contracting with over 100 illustrations and examples. We include a CD of 60 Excel Templates when you buy a book from our website. We also include our library of forms and 5 online courses.
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Matt Stevens is a management advisor who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.">mstevens@stevensci.com.
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Posted by Matt Stevens at April 14, 2006 2:39 AM
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