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 scope of work
• Payment milestones
• A change order policy
• Completion criteria

This sets expectations and gives you leverage when things change (and they will).

2. Create a Simple Project Timeline

Even a basic calendar or whiteboard showing:

• Job phases
• Material delivery dates
• Key milestones

can help you stay on track and manage client expectations.

Suppose you're using software like Buildertrend or Jobber, great. If not, even a shared Google Sheet can work. The goal is visibility.

3. Track Labor in Real Time

You can't manage what you don't measure. Use time tracking tools (like ClockShark or QuickBooks Time), or even a shared text log, to record:

• Who worked
• For how long
• On which part of the job

This allows you (and your bookkeeper) to identify when jobs are dragging and compare actual versus estimated hours.

4. Monitor Materials Closely

Set up a simple system to:

• Track what materials were ordered
• Match receipts to jobs
• Avoid duplicate purchases

If you have frequent material overruns, your bookkeeper can help you adjust future estimates and avoid surprises.

5. Enforce a Change Order Policy

This one is HUGE.

Every time a client asks for something outside the original scope, pause and issue a change order. Even a one-page form signed via email or a mobile app is sufficient.

Change orders should:

• Define the change
• List any added costs or time
• Be signed before work continues

When this is routine, you stop giving away "just one more thing" for free.

6. Communicate Early and Often

Most client disputes happen when they're left in the dark. Set the standard for regular updates:

• A weekly progress email
• A shared photo log
• A short call every Friday

This maintains high trust and prevents minor issues from escalating into unpaid invoices or negative reviews.

7. Review Project Profitability After Completion

After every project, sit down with your bookkeeper (or even just your notes) and ask:

• What was the estimated vs. actual cost?
• Where did we exceed our budget or deadline?
• Did we bill for all extras?
• What should we do differently next time?

This post-job review turns every project into a learning tool that improves your future estimates, planning, and pricing.

Where Bookkeeping Supports Better Production

As your construction bookkeeping specialists, we can help you:

• Track job costs accurately during the project
• Alert you when a job is going over budget
• Ensure change orders are captured and billed
• Break down labor and materials per project
• Provide job-by-job profit reports

In short, good production data = good financial reporting. And when we work together, we can spot patterns that help you grow smarter.

The Results of Controlled Production

When you focus on project delivery as intentionally as marketing and money management, you'll start to see:

• Jobs finishing on time
• Less rework and missed items
• Higher profit margins
• Happier clients (which means more referrals)
• Reduced stress and better control of your schedule

Over time, this builds a reputation that attracts higher-quality clients, enabling you to raise your rates with confidence.

Final Thoughts

Build Systems, Not Just Projects

You know how to build a deck, remodel a kitchen, or manage a crew. But your business needs structure, too. When you build systems around how you deliver your work, you reduce chaos and protect your profits.

Pillar 3: Production isn't about doing more—it's about doing smarter. With a bit of planning, tracking, and review, you can make every job a stepping stone to a stronger, more profitable business.

Want Help Tracking Job Profitability?

If you're tired of guessing how much money you're really making on each job, we can help you set up:

• Job costing systems
• Labor and material tracking
• Change order logs
• Profit and loss reports per project

Let's get your numbers working for you.

Book a free consultation today and let's build better systems together—so you can build a better business.