Source: CUSTOM HOME Magazine
Publication date: November 1, 2005
By Steve Maltzman, CPA
As we approach the end of this year it is a good time to begin development of your budget for next year. In developing your budget, take time to challenge your operating expenses.
I recommend breaking your operating expenses into four major categories: indirect costs, sales and marketing, finance, and general and administrative expenses. Following are some tips on controlling these expenses:
Indirect construction costs. Indirect costs represent those costs related to construction that cannot be specifically identified with a particular job. Items within the indirect cost category include wages and benefits of your superintendents, estimator, designer, purchasing manager, and laborers, as well as costs of operating construction vehicles, warranties, and small tools purchases.
Challenge the use of your laborer. Many custom builders will have a laborer on their jobs performing tasks such as cleanup. Is your laborer doing work for your sub?Consider implementing an inventive compensation program for your superintendent and other field personnel that is tied to productivity. Especially when times are tight you are better off having employees with low base salaries earn additional pay by achieving and exceeding goals and objectives. Make sure the incentive plan you implement is measurable and the activities measured by the plan are under the control of the employee.Click here to read full article from Custom Home
