Supply Chain Council of European Union | Scceu.org
Procurement

Ask Doug & Polly: Follow these tips to avoid year-end financial surprises | Column

• Calculate job level profitability: You should have a system that calculates the profitability of each individual job.

Determining the revenue that each job generates should be straightforward. Record the materials you use on each job.

This may mean splitting some invoices. For example, you might order nine yards of concrete and use six yards on one job and three yards on another. You’ll have to split the expense accordingly.

To keep things simple, allocate lower cost supplies such as nails, wire nuts and tape, to each job as a percentage of revenue.

You’ll need a system for tracking the hours your people work and assigning them to each job. Obviously, you will need to charge the cost of any subcontractors appropriately.

Once you have such a system in place, you will be able to pinpoint problems and opportunities.

Issues you might identify include poor estimating and quoting, too many hours being booked to a job and excessive material costs.

Without such a system, these challenges are likely to go undetected.

Doug and Polly White have a large ownership stake in Gather, a company that designs, builds and operates collaborative workspaces. Polly’s focus is on human resources, people management and human systems. Doug’s areas of expertise are business strategy, operations and finance.

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