CONTRACTOR ROAD TO SUCCESS
Taking your construction business on the road to success may lead to a few financial detours and administrative potholes , but there are several critical road signs along the way that will keep you on the path to success . In order to avoid taking costly detours , pay attention to these signposts : Cash Flow Projection ( CFP ), Bookkeeping / Back Office , Marketing efforts , and the Bid process .
Cash flow projecting is crucial because it identifies your cash position , at a specific point in time , in relationship to an individual project . The CFP is based on the following points of data :
Project value broken down by amount bid , direct costs , overhead and profit
Your beginning cash position based upon a current financial statement
Project schedule / duration Contract payment terms
The CFP identifies the cash required to start and continue a project , project income and when it can be expected to arrive , change order impact on costs as well as income , and your projected ending cash position on a project . Understanding your liquidity and managing it is essential to your success as a contractor . By running a projection up front , and updating it continuously during the course of construction , contractors are better able to make adjustments in field activity during the course of construction to preserve a profitable outcome to the project .
“ Cash flow projections are part of the decisionmaking process in going forward and bidding a project and risk management during the course of construction ,” says John Miller , Contractor Capital Solutions Program ( CCSP ) Program Manager . “ These projections help SLEBs [ small local business enterprises ] identify the cash required carry out a contract , potential cash shortfalls and allow them to take appropriate measures in estimating , bidding and negotiating a contract , and / or look for additional funding .”
04 - imwis . com