Masonry Magazine January 2001 Page. 66
centage(s)', but these percentages aren't worth the paper their written on if they're not backed up by all of the other operations of the business.
A DIFFERENT KIND OF BUSINESS
So, we begin our program, but right off, we encounter a stumbling block. We're in construction contracting. We don't sell widgets. Our product is no where near as touchable and discernible as the more comprehendible manufacturer's product line. There, you can actually view and touch the product from beginning to end and in all of it's parts, pieces, and stages throughout the course of its creation. Most everything is definable, quantifiable, and therefore, more addressable should problems or needed adjustments arise.
In contracting, we don't enjoy this level of control. As much as we'd like to think otherwise, our command over our jobs (and eventually our profit) - even in the most professional environments - can prove mercurial and slippery ... to become affected and manipulated by a myriad of unanticipated circumstances. Better put, we're not simply talking about one (profit) number being affected by one particular stimuli (problems that degrade our profit). It's more like one conceptual number being affected by stimuli that numbers somewhere around a sold-out superdome! Degrading circumstances can come out of nowhere, causing our profit line item to become a moving target. Well, perhaps "moving" is a bit placid... let's see ah, yes, schizophrenic is a better choice.
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IF IT WEREN'T FOR ALL THESE HUMANS
Now, the reasons for such volatility are many and wide-ranging, but it's safe to assume that much of the turmoil springs from the fact that we are as much a social business and a technical one. The human condition (and every personality quirk that comes with it) greatly influences our success more so than in the more finite environment of manufacturing. It isn't enough to simply hammer out the technical end of our business. If that were the case, there would be many more that would succeed.
To achieve success, we also have to own the ability to intertwine and meld into the mix the personalities and problems of those people whom we've chosen to perform our work. This, of course, can be a massive, elusive, and (very often) frustrating social exercise; ranging from workers not showing up to project manager's alienating an owner by mouthing off. It can also be the difference between the workmanship and attitude of one worker over another. In the end, all of these human attributes come back to (often adversely) affect our profit.
So, let's take a moment to examine the profit motive, weigh the social and technical aspects, and discuss some steps that you - the owner/contractor-can take to gather back control of this slippery - yet all too critical-business element.
LET'S DEFINE PROFIT
Simply put, profit is the revenue that is left over after you pay off all expenses on a project(s), cover all office overhead costs (for the project & the office), and pay all taxes owed the government. So, knowing this, it becomes apparent that the first thing you must do is have a firm handle on your costs. Here's how I break down the costs to a typical job. The total net cost is generally arrived at by combining the:
Labor costs
Material costs
• Project overhead (directly related or attributable to one particular job in progress, also referred to as general requirements or GR's)
There is another overhead known as office overhead (more related to the day-to-day cost of doing business - and less assignable to any particular job in progress). I like to set OH off to the side, and let it become a factor for later determining a profit percentage. Now, once the total actual cost (to the contractor) of the project is determined, the
66 MASONRY JANUARY, 2001