When Every Dollar Counts
The economic downturn has only heightened the need for contractors to look
for ways to save money and increase revenues. A top-to-bottom review of your
operations may reveal some surprising areas where significant savings can be
found.
Manage Equipment Use More Efficiently
Fuel is probably a major expense for you, especially if you are involved in
road, bridge and other types of heavy construction. You can reduce fuel
consumption by monitoring equipment idle times and managing fuel efficiency.
Remote asset management technology uses GPS hardware attached to each piece
of field equipment to send data via a server or cell tower to a desktop
computer in your main office. Your office staff gets real-time data on the
equipment’s precise location, run times, idle times and speed. Armed with
this information, you can see how much fuel is being used and take steps to
establish procedures that reduce idling times. Reducing idle times for
equipment not only saves fuel, it often translates into increased job site
productivity.
Using remote asset management technology can also save money on maintenance.
For example, the system can automate the process of monitoring equipment
maintenance schedules and help in scheduling timely maintenance on heavy
equipment. Better scheduling reduces wear and tear and helps prevent
equipment breakdowns.
Charge for Every Change Order
Tracking and charging for every change order lowers your cost of doing
business. For every change your customer asks for, break down the costs and
present the estimate before you begin any work. For each change order, use a
standardized cost template. Be sure to capture all extra costs, including:
-
Additional time to process paperwork, supervise the work and complete additional accounting
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Costs associated with the use of equipment, tools, utilities and temporary protection, such as fencing and barricades
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Gas and oil
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Insurance
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Clean-up
Record every change order in a
log created for this purpose. Change orders should be identified by serial
number, subject and date received. Obtain the signatures of all parties
involved before work begins.
Improve Material Handling
You can improve productivity by reducing the unnecessary handling of
materials on the job. Implementing a measurement program that allows you to
determine how many times material is double handled on a job is a critical
first step in this process. Once you have the data, specific situations and
conditions that create a high likelihood that material, supplies and
equipment will be double handled should be easier to identify.
Consider preparing a map of your job sites and designating specific
locations for storing materials where they will be safe from theft or
damage. It makes sense to locate these sites as close as possible to where
the bulk of the project’s work is being done and only move materials and
equipment from the storage locations to places on the site where they will
be used immediately.
Somerset Can Help
Our Construction & A/E Team has been very active in advising contractors how to effectively manage through this difficult time. If you would like Somerset to provide you with information and contractor best practices to help "survive the downturn," please contact us today.
Work-In-Process is provided by
Somerset for our clients and other interested persons upon request.
Since technical information is presented in generalized fashion, no
final conclusion on these topics should be made without further review.
For additional information on the issues discussed,
please contact
Ken
Hedlund,
Jay Feller,
Steve George,
Chris
Mayfield or
Rebecca Ogle
of our
Construction & A/E Team.
This document is not intended or written to be used, and cannot be used,
for the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.IndianaConstructionCPAs.com
info@somersetcpas.com
