The Virtuous Cycle 

Understand costs

Set rates

Build price book – with margins

Build estimating process – with same margins

Do quotes – same margins

Win jobs – same margins

Do jobs – same margins

Check the margins

Figure out where the money went

Fix the problem

The Money Holes

1. Not charging enough – in the first place
2. Discounting when asked to
3. Shitty estimating
4. S#*tty Execution
5. S#*tty Project Management (scope creep)
6. Overhead creep
7. Non-payment or late payment
8. Not asking for payment
9. Leaving money on the table
10. Not knowing
11. Going quiet

All this money leaks belong to somewhere in the triangle, don’t they?

And they are all involved with the Virtuous Cycle

That’s the context for this job – measuring job profitability after you’ve done a job

You’ll understand whether a job is as profitable as what you think it should be. Then we can go round the cycle and the list of 11 and think about what’s causing it

The more we dig and the more information we have, the better.

If you measure the labour hours and you know from your estimating how many labour hours there should be, you’ll know something more

A couple more examples:

Adrian – did a fixed price quote for sitting ceiling tiles, then found that his team were cleaning the lift and the other carpenters were using their saw horses to saw stuff and moving their shit so they had to move it back…..

(What was it?)

Solution?   Being clear on the scope that is included and not doing anything outside the scope unless a variation (Rather than rolling over)

Ben – Get told by builders when they have to install aircons but really they can call them and ask questions and find they have a window of days (before the gyprockers come in to finish their bit, so they have more flexibility to plan the job

Scope creeps without you noticing sometimes but pushback is often fine.