Construction Labor Costs – 5 Percent Factor

Improve Your Construction Labor Costs

Most construction companies only make an average annual net profit between 2 and 3 percent. Improve your construction labor costs by only 5%, and you can improve your net profit amount to 4-5%. This can be as much as a 100 percent increase in your construction business’ bottom line!

If you can improve your construction labor by 5 percent (see figure 1 above), your net profit will increase to $7,000, or from 5 to 7 percent net profit.

Improve Construction Field Productivity and Beat the Projected Schedule by 5 Percent (see Figure 2 and 3 below)

In addition to saving on your crew labor budget, the overall construction project will finish faster as well. You will save even more money concurrently on general conditions, equipment, clean-up, temporary facilities and supervision costs.

Poor Production in Construction= Poor Construction Business Profits!

Do you think your construction crew wastes at least three to six minutes per hour? Those few minutes are costing you a ton of money. (see Figure 4 below)

There are many ways to improve crew efficiency and finish your jobs faster. Start by taking a hard look at your start time, break time, lunch time and quitting time. Does clocking out at 3:30 p.m. mean start rolling up at 3 p.m. or 3:10 p.m. or 3:30 p.m.? For a twenty-person crew, every minute you lose per day costs you as much as $2,500 per year or more.

All charts are available in pdf format for print and/or download for quick reference. To view this pdf, please download

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Construction Business Owner, May 2009