Published On: Fri, Nov 2nd, 2018

Why Construction Companies Need To Take Account Of These Ongoing Costs

Although taxing, working in construction can be a very rewarding job, particularly when you see the end product of a project you have been working on for months or even years. It can also come in pretty handy if you wish to renovate your own home, but it must be remembered that there is a lot to consider in the construction industry.

Construction Companies

The obvious costs such as materials, labour, tools, hired-in equipment and so on, may all be accounted for but there is a string of other expenses that may not be considered. It’s important that construction companies take such ongoing costs into account, so the business does not end up struggling financially. Doing so may leave them in a position where they are unable to fulfil or finish a project.

When it comes to estimating the total cost of any construction job, indirect overhead costs should be foreseen. Such overhead costs are those that are not specific to any particular job, but the fees paid by the contractor on a regular basis, these charges are not suitable for just one particular project.

Direct overhead costs on the other hand, are unique to one job and change from project to project. It’s important to take indirect and direct costs into account so you know you have enough to cover the job in hand and are able to source the relevant materials, labour and tools required whilst staying within budget. Failure to do so can put a project on hold for a lengthy period, causing future projects to stall therefore damaging the business’s reputation and financial health. 

Having the Right Insurance

Whilst indirect and direct overhead costs may vary, one thing that should remain consistent is the company’s construction public liability insurance. Admittedly, finding the right insurance policy for a construction business can be tough but public liability insurance is the one policy any reputable construction company will have. The cornerstone of any insurance policy, construction public liability insurance will cover your business for any injury to third parties or damage to their property, claims made by clients, members of the public, executives and customers will all be covered. Whilst the costs of the insurance premiums and any potential excess need to be accounted for, it’s far less than the hundreds of thousands that would need to be accounted for should a claim arise without valid public liability insurance cover. 

Indirect Expenses to Consider

In regards to indirect expenses, the most common costs to be accounted for include salaries and bonuses of employees including those responsible for the business’s accountancy and bookkeeping. It’s easy to just consider those working onsite when in the construction business but it’s also important to account for the salaries and benefits of those in the office. In addition to this, costs of the office, office supplies and utilities must be remembered. It is also important to account for the cost of marketing and advertising your business, if you fail to put your business’s name out there, you maystruggle to attract clients.