TABLE OF CONTENTS You can make more money by avoiding cost overruns. I m sure you know this, but you may not know how to avoid going over budget. A lot of contractors have trouble keeping their spending within the confines of a budget. When was the last time that you had a job run into higher costs than you were expecting? Do you perform job costs for all your work? If you re not doing job costing, you can t know how well your estimates worked out compared to the real cost of a job. It may be surprising to you, but a lot of contractors don t maintain regular job-costing procedures.
Before you can stay on budget, you have to create a budget to follow. This is something else that far too many contractors are lax in doing. Many contractors work up a lump-sum figure and work only from it. They may know if they make or lose money, but they don t have enough information to know where the wins and losses come from. This is bad business.
Setting up a job budget is not difficult to do. You don t need a degree in accounting to manage the task. It does take a little time to establish a framework of prices, but it is time well spent. Most successful contractors never start a job without a budget. You shouldn t either.
When I m getting ready to bid on a job, I break my bid work down into phases. My breakdowns are...
