Far too often, we see construction and manufacturing business owners left scratching their heads as the GP they’ve reported on is a fraction of what it was when costing their projects.

There are a few possible reasons you aren’t achieving your expected profit margins. Broadly speaking, it boils down to either a costing problem or it’s a project management problem.

If it’s a costing problem, there’s a fair chance you aren’t costing your labour correctly.

Here’s why.

Let’s say your labour costs you an overage of $50 an hour. Is that what you cost your project labour at? Of course not.

You need to allow for super, so that’s another $5.50. Hang on, there’s workers comp as well, maybe even payroll tax. Let’s just round it up to $60 an hour.

That should cover it.

Except it doesn’t.

Because if you stop there, you’re not allowing for….

  • Public holidays
  • Annual leave
  • Sick leave
  • Smoko breaks, toilet breaks, wander round looking busy breaks
  • 45 minutes Jonesy spends looking for the tools he knows he left somewhere, but can’t find
  • The 25 minutes Henry and Davo spend arguing about whether Parramatta will win the NRL and why Melbourne will be hopeless this year
  • The list goes on

Let’s face it, 100% productivity only happens in your dreams.

So if you want to get your real GP somewhere near where you think it should be – check your labour costings.

Download our simple workbook to calculate your real labour cost here.

Partnering with Quantum Advisory allows you to focus on what you do best – running your business – while leaving the financial aspects in capable hands. Contact us today to experience the benefits of working with Quantum Advisory.