Confessions of a Cost Estimator’s Post

Confessions of a Cost Estimator: Counting Pennies & Derailing Dreams? Have you ever heard the saying, "Penny wise, pound foolish?" In mega-projects, it's more like, "Penny wise, multi-million pounds foolish!" As a cost estimator, I've seen firsthand how the obsessive hunt for micro-savings can throw a wrench into the gears of even the most well-oiled machines. Death by a Thousand Papercuts: While we're haggling over a 5% discount on office supplies, critical materials might be delayed, causing weeks of downtime and hundreds of thousands of hours of lost productivity. The Sunk Cost Fallacy on Steroids: Imagine nixing a £10,000 software upgrade that would streamline our entire workflow, only to spend £50,000 in overtime trying to do the same tasks manually. Missing the Forest for the Trees (Or the Bridge for the Bolts): It's easy to get tunnel vision on line-item expenses, but ignoring the bigger picture can lead to massive oversights in overall project scope and budgeting. The Bottom Line? Micromanagement of minor expenses can be a significant project killer. A balanced approach that prioritises strategic cost control is critical. After all, we're building bridges, not just balancing spreadsheets! #InfrastructureHumour #CostPlanning #BudgetQuest #InfrastructureAdventures #UnexpectedCosts #BudgetBuster Let's connect and share war stories! Have you ever seen a project go sideways due to excessive penny-pinching? What strategies have you found successful for maintaining a healthy balance between cost control and project progress? Let me know in the comments! 

I can relate to this as a past cost engineer.

A perfect summary. We often overlook how technological advances can provide a significant reduction in profits. Higher overheads effect every project overall and your bottom line net profits.

Confessions of a Cost Estimator: Counting Pennies & Derailing Dreams? Have you ever heard the saying, "Penny wise, pound foolish?" In mega-projects, it's more like, "Penny wise, multi-million pounds foolish!" As a cost estimator, I've seen firsthand how the obsessive hunt for micro-savings can throw a wrench into the gears of even the most well-oiled machines. Death by a Thousand Papercuts: While we're haggling over a 5% discount on office supplies, critical materials might be delayed, causing weeks of downtime and hundreds of thousands of hours of lost productivity. The Sunk Cost Fallacy on Steroids: Imagine nixing a £10,000 software upgrade that would streamline our entire workflow, only to spend £50,000 in overtime trying to do the same tasks manually. Missing the Forest for the Trees (Or the Bridge for the Bolts): It's easy to get tunnel vision on line-item expenses, but ignoring the bigger picture can lead to massive oversights in overall project scope and budgeting. The Bottom Line? Micromanagement of minor expenses can be a significant project killer. A balanced approach that prioritises strategic cost control is critical. After all, we're building bridges, not just balancing spreadsheets! #InfrastructureHumour #CostPlanning #BudgetQuest #InfrastructureAdventures #UnexpectedCosts #BudgetBuster Let's connect and share war stories! Have you ever seen a project go sideways due to excessive penny-pinching? What strategies have you found successful for maintaining a healthy balance between cost control and project progress? Let me know in the comments! 

After working with over 100 clients solving cash flow and expense tracking issues, I need you to know this is the #1 thing that is overlooked 👇🏽 Not tracking labor costs accurately. and it's costing you big time. Labor is often the biggest expense in a construction business, and when you’re not tracking those hours down to the minute, you’re losing money without even realizing it. One client came to me with a major cash flow issue. Turns out, labor hours were being mismanaged, and we found out he was overspending by thousands each month on projects labor compared to what he estimated. His guys were spending more time per project then what he expected and he never adjusted his budgets because he simply had no idea of this issue until we started tracking the hours by project. Once we dialed in his labor cost tracking, his profits went up, and the cash flow problem disappeared. Don’t let something as simple as labor tracking cost you more than it should. It’s an easy fix with a big impact. 💸

𝐌𝐚𝐱𝐢𝐦𝐢𝐳𝐞 𝐘𝐨𝐮𝐫 𝐏𝐫𝐨𝐣𝐞𝐜𝐭 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐑𝐢𝐠𝐡𝐭 𝐑𝐞𝐩𝐨𝐫𝐭𝐬 📈 In the construction, keeping track of your finances is crucial for each project's success. Two powerful tools for this are the WIP (Work-In-Progress) Report and the Job Cost Report—each offering unique insights to keep your project on track financially. ✅ WIP Reports: Ideal for tracking overall project progress, revenue recognition, and financial compliance. They help ensure accurate billing, show completion percentages, and keep cash flow steady. ✅ Job Cost Reports: Perfect for detailed tracking, these reports break down expenses by task and material, helping you manage your budget effectively and adjust spending as needed. Link our guide: https://lnkd.in/g9Awv55y At Construction Cost Accounting (CCA), we’re here to provide expert bookkeeping services tailored for your construction projects. Whether you need WIP forecasting or job cost analysis, our team is ready to help you maintain profitability and enhance financial transparency. #constructionbookkeepingservices #wipreport #constructioncostaccounting --------------- Construction Cost Accounting Maximize Your Profits 8317 Painter Ave #4 Whittier, CA 90602 +1 949-889-3283 support@constructioncostaccounting.com

In construction, the phrase we hear all too often is, "Cash is tight, payroll is due, but I can't invoice until month-end." Sound familiar? This scenario leaves many in a bind, forcing them to make tough decisions and unwanted compromises. Our mission? To simplify and ease these challenges, not just for our clients but for their customers too, ensuring everyone looks good in the process. The secret sauce? Mapping out cash flow meticulously. 🗺️💰 This enables contractors to navigate their weekly financial needs with precision, ensuring they can perform their work efficiently and, most importantly, thrive. Here's the lowdown: Most contractors excel in two critical areas but often miss a crucial third step. 🛠️ 📝 𝗕𝗶𝗱𝗱𝗶𝗻𝗴: They've got a solid system for estimating projects. 🗓️ 𝗦𝗰𝗵𝗲𝗱𝘂𝗹𝗶𝗻𝗴: They know the ins and outs, from timelines to crew requirements. 💡 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: This is where many stumble. Understanding how to allocate the project's costs in alignment with cash flow can make or break a project's financial health. Imagine tackling a million-dollar job. Whether you need to invest $150,000 or $500,000 upfront can significantly impact your project's cash flow and stress levels. Often, contractors find themselves in a pinch mid-project, wishing payments would just come through faster. Our aim? To prevent those mid-project surprises by providing a clear cash flow roadmap from the start. 🌟 This way, contractors aren't left saying, "If only everyone paid on time," but instead, they're prepared and proactive about their financial management. At Mobilization Funding, we're all about making life easier for contractors, ensuring they have the tools and knowledge to manage their cash flow effectively. Let's work together to keep your projects—and cash—flowing smoothly! 💼🔄 #cashflow #cashflowmanagement #businessgrowth #construction #constructionindustry

 👋👋 Post 3 :Understanding Variance Analysis in Construction Projects 🏗️📊 Imagine this: You're managing a big construction project, and everything seems on track. But soon, costs spiral out of control, and the timeline slips away. What went wrong? Enter  Variance Analysis —your financial detective 🕵️♂️ in the construction world.   What is Variance Analysis? Variance Analysis compares your project's actual performance (cost and time) against your original budget. Think of it as checking if you're sticking to your gym routine—except here, it's about sticking to your budget and schedule 💷📅.   Key Components of Variance Analysis: 1.  Cost Variance (CV) 💰:     -  What it is:  The difference between budgeted and actual costs. If you budgeted £500,000 for materials but spent £550,000, your CV is £50,000.   -  Why it matters:  Understand where you're overspending and adjust future budgets. 2.  Schedule Variance (SV) ⏳:     -  What it is:  The difference between planned and actual progress. If a task planned for 3 months takes 4, your SV shows you're behind schedule.   -  Why it matters:  Early identification of delays allows corrective action before they impact the project. 3.  Root Cause Analysis 🔍:     -  What it is:  Investigating the reasons behind variances. Is it material price hikes or weather delays? Understanding the root causes helps in better future planning.   -  Why it matters:  Identify the "why" to prevent similar issues in future projects.   Why is Variance Analysis Important? In construction, delays and extra costs can snowball into significant losses. Variance Analysis helps: -  Avoid Cost Overruns:  Spot financial discrepancies early to control costs. -  Stay on Schedule:  Identify and mitigate delays early. -  Improve Future Projects:  Apply lessons learned to improve planning and budgeting accuracy.   Example: Suppose your project had a £2 million budget for labor, but you spent £2.3 million. Variance Analysis reveals the extra £300,000 was due to unexpected overtime caused by material delivery delays. With this insight, you can renegotiate delivery schedules or adjust workforce management.   Takeaway 🎯: Variance Analysis is your project’s GPS 🧭—keeping you on track by navigating financial and scheduling challenges. Regular analysis ensures your projects stay within budget and on schedule, leading to successful outcomes. #ConstructionManagement #VarianceAnalysis #ProjectControl #CostControl #AnasRamadan

Understanding Labor Burden Rates: Boost Your Profit Margin ⠀⠀⠀⠀⠀⠀⠀⠀⠀ In this video, we detail the process of calculating labor costs for a supervisor over three days by incorporating burden rates and profit margins. By breaking down hourly rates, overhead, and profit calculations, the video provides a clear method to determine extended costs and unit prices for accurate budgeting and financial planning. ⠀⠀⠀⠀⠀⠀⠀⠀⠀ 00:00 Introduction to Supervisor Requirements 00:16 Calculating Burden Rate and True Cost 00:41 Unit Cost Formula Breakdown 01:08 Extended Cost Calculation 01:15 Overhead, Profit, and Final Pricing ⠀⠀⠀⠀⠀⠀⠀⠀⠀ 🔨 How to Estimate a Construction Project for Contractors (FREE TEMPLATE) 🏗️ ⠀⠀⠀⠀⠀⠀⠀⠀⠀ 📲 Download Free Template: https://lnkd.in/gTei8UF9 ⠀⠀⠀⠀⠀⠀⠀⠀⠀ #LaborBurden #Construction #Accounting #CostAccounting #Labor #LaborAndBurden #BusinessOverhead #ConstructionManagement #CostOfWork #DirectLaborBurden #BurdenedLabor #LaborBurdenPercentage #BurdenCosts #TrueCostOfLabour #LaborBurdenCalculator #LaborCosting #LaborBurdenCalculation #FullyBurdenedLaborRate #BurdenRateCalculation #EmployeeCostPricingAnalyzer #LaborBurdenWorksheet #LaborCost #NickPeret #CTO #FractionalCTO

Are you using one of the most overlooked but powerful tools in construction - what if you had a crystal ball? 👇 A crystal ball in the #construction industry is the WIP report, but why? WIP reports: ✅ Spot profitability issues before it's too late - a weekly review with project managers forces the conversation about how to get off-track budgets back on track, ✅ Gives insights on how your jobs are financed - tells you if your projects are cash flowing correctly or if you are borrowing from one job to pay the costs of another, ✅ Smooth out financials - wild swings in your revenue and profit make it difficult to accurately plan for the future, ✅ Eliminate unforeseen cash flow issues - know in advance when cash will get tight so you can sleep knowing payroll is covered because you prepared. I've seen WIP reports change the lives and financial outcomes of business owners - no company is too big or too small to use WIP reports. Have a question about WIP reports? Comment below 👇