On a Construction Project, Who Makes the Money?

On a Construction Project, Who Makes the Money?

Money is the lifeblood of all industries and industries need to generate enough money from their activities so that they can meet their expenses and have enough left over to grow and expand. The same goes for the construction industry.

For construction firms, when dealing with cash flow, it consists of managing funds to pay salaries, procure the materials and complete building projects. Cash flow, however, is also an important measurement that shows the movement of income from a construction project into several pockets.

Even though construction costs are on the rise, there are still money savings that can be made and some sectors within the construction industry are still considered profitable. Generally, gross profit margins in the construction business can range from 6 % to around 45 %. Of course, some firms may have a higher margin. Research further revealed that about 85 % of the money (cash) in construction comes mostly from construction projects.

But, the question is: Who are those who make money on these construction projects?

Construction Contractors

Construction ContractorsWhen construction contractors lay out how they will manage and execute a construction project, from design to construction, it means they are operating on a profitable business model. While some would try to cut corners, others would work with a clear budget, clearly defined schedule and would pay attention to quality. The reality is that they are working with a business model that’s more profitable than “cutting corners.”

Construction Workers

Construction WorkersConstruction workers are the driving force behind every construction project that takes place across the world. Setting up the construction site, moving and preparing materials, building a variety of structures and cleaning and removing the debris; all of these wouldn’t have been possible without construction workers.

Construction workers are employed as part of a construction crew and perform a variety of tasks during all phases of a building project. With their knowledge, skills and expertise, they get a construction project to the finish line. While they all play a critical role in constructing a good and safe building, they specialize in different areas, like using specialist construction knowledge to design buildings, inspecting project drawings and designs, tearing down buildings, laying concrete, digging tunnels, and so on.

Statistics for 2021 revealed that construction worker salaries averaged $ 37 520. When compared to other positions in the service, many claim that construction workers tend to make more money. For instance, an experienced senior-level construction worker with around 15-20 years of expertise might make over $ 100 000 per year.

While it is true that construction workers are paid well, their paychecks vary depending on the construction project. However, since these construction jobs aren’t easily outsourced, employees tend to demand and receive a higher income for their work.

How to Enhance Flow, Production and Profitability?

How to Enhance Flow, Production and Profitability?While they were caught up in price hikes and supply chain shortages, construction firms and leaders lost sight of who makes on the construction project. The reason why this is important is that a business can only be profitable when it is operating on an effective business model and when it is optimizing its resources.

If you find your construction firm to be disconnected from lean management styles or profitable business models, here are ways how you can fix it:

• Leaders should be confident and know what they are doing.
• Leaders should have goals they want to achieve and these goals must be communicated to construction workers.
• Any hierarchy that threatens the trust between a leader and its “followers” should be erased.
• Most decisions about the construction project should be made together as a team.
• Managers should take a close look at how much resources are being wasted and what measures can be taken to avoid waste.

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