In the construction industry, understanding your true labor cost is crucial. This was a hard-learned lesson for Mike, a seasoned contractor who thought he knew the full extent of his labor costs, but a detailed analysis revealed significant gaps in his calculations.
The Bidding Blind Spot
Mike’s first challenge was in his project bidding process. He based his labor cost estimates on easily visible factors, neglecting the deeper, hidden costs of his employees. This oversight led to bids that underrepresented the actual expenses, affecting the overall profitability of his projects.
Misleading Profit and Loss Statements
The second issue was in Mike’s financial reporting. His profit and loss statements gave an inflated view of his gross profit margin. The culprit? Rising employee benefits and a few other line items were not being allocated correctly. These should have been included in the cost of goods sold but were instead shown as overhead expenses.
Correcting the Course
To tackle these issues, we recalculated the labor costs in Mike’s bids to reflect the true cost of his employees. We then restructured his profit and loss statements to align these costs accurately under the cost of goods sold. This not only gave Mike a true picture of his gross profit margin but also guided him toward more accurate and profitable bidding.
The below Video Tutorial and FREE Template I’ve provided here will guide you through the process of accurately calculating your fully burdened labor cost. Additionally, take advantage of the FREE Labor Cost Calculator template I’m offering. These tools are essential for ensuring your project bids encompass all relevant costs and your financial statements reflect the true health of your business.
Conclusion: Take Action for Financial Clarity
Now is the time to enhance your financial acumen. Watch the video, use the template, and start transforming your approach to project pricing and financial analysis. Share your insights with the construction community and let’s pave the way for a future of accurate costing and increased profitability!
Get your FREE Labor Cost Calculator Template and Watch the Tutorial Video now!
Embrace accuracy in your financial practices. Watch the video, apply the template, and join a community of savvy construction professionals dedicated to financial clarity and success. Your journey towards a more profitable business starts here!