Construction businesses often market their products and services before a structure is completed. Once built, many companies discover that the project wasn’t as profitable as originally calculated. Cost overruns, pricing increases, and unforeseen labour shortages can all impact the bottom line of a building development. Although few can foresee every possible construction site problem, many of the preconstruction cost saving initiatives are overlooked.
Frequently, a standard approach to overhead costing is employed when in fact an overhead allocation method that is sensitive to the specific project will provide superior results. Some projects are driven by labour, while others are more material intensive. A singular method of overhead projection does not fit all jobs.
In addition, inaccurate estimating can sink a project long before its completion date. Incorrect recording of costs, inappropriate handling of change orders, and poor forecasting all eat a way at a job’s profitability. The way to keep these problems at bay is to do your actual costing- to- estimate comparison every month.
Today, more specialized construction projects are funded by Joint Ventures. As there are many approaches to joint venture accounting, it’s important to establish the accepted method in the beginning – before the project is underway. Deeth & Co. can provide you and your partners with the correct pathway to keep your project simplified and in compliance to all stakeholders.