Profitability - Revision history

Designing Buildings at 07:52, 7 November 2020

2020-11-07T07:52:36Z

← Older revision		Revision as of 07:52, 7 November 2020
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	* Investing in new technologies and systems and adapting them effectively to the business.		* Investing in new technologies and systems and adapting them effectively to the business.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Accounting.		* Accounting.
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	* Yield.		* Yield.

−	[[Category:~~Standards_/_measurements~~]] [[Category:~~DCN_Standard~~]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Standards_/_measurements]] [[Category:Cost_/_business_planning]]

Editor at 12:19, 16 April 2018

2018-04-16T12:19:43Z

← Older revision		Revision as of 12:19, 16 April 2018
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	* Net Present Value.		* Net Present Value.
	* Profit.		* Profit.
		+	* Solvency.
	* Working capital.		* Working capital.
	* Yield.		* Yield.

−	[[Category:Standards_/_measurements]] [[Category:Cost_/_business_planning]]	+	[[Category:Standards_/_measurements]] [[Category:DCN_Standard]] [[Category:Cost_/_business_planning]]

Editor at 17:07, 5 January 2018

2018-01-05T17:07:06Z

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	To maintain profitability in the construction industry, businesses must overcome the challenges posed by volatile material, labour and equipment costs and the complexity and risk of bidding on projects with long durations against tight competition.		To maintain profitability in the construction industry, businesses must overcome the challenges posed by volatile material, labour and equipment costs and the complexity and risk of bidding on projects with long durations against tight competition.

−	The construction industry is notoriously susceptible to changes in economic outlook, and regularly goes through booms and busts as it is used to hold back or push forward the wider economy. The [https://www.glenigan.com/sites/default/files/UK_Industry_Performance_Report_2015_883.pdf 2015 UK Industry Performance Report] suggested that the profitability of the construction industry was around 3%, up from around 2% the previous year, but well the peak of 9.9% in 2009.	+	The construction industry is notoriously susceptible to changes in economic outlook, and regularly goes through booms and busts as it is used to hold back or push forward the wider economy. The [https://www.glenigan.com/sites/default/files/UK_Industry_Performance_Report_2015_883.pdf 2015 UK Industry Performance Report] suggested that the profitability of the construction industry was around 3%, up from around 2% the previous year, but well below the peak of 9.9% in 2009.

	= Profitability ratios =		= Profitability ratios =
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	* Investment property.		* Investment property.
	* Net Present Value.		* Net Present Value.
		+	* Profit.
	* Working capital.		* Working capital.
	* Yield.		* Yield.

	[[Category:Standards_/_measurements]] [[Category:Cost_/_business_planning]]		[[Category:Standards_/_measurements]] [[Category:Cost_/_business_planning]]

Editor at 11:52, 29 September 2017

2017-09-29T11:52:50Z

← Older revision		Revision as of 11:52, 29 September 2017
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	* Insolvency.		* Insolvency.
	* Investment.		* Investment.
		+	* Investment property.
	* Net Present Value.		* Net Present Value.
	* Working capital.		* Working capital.

Editor at 12:04, 7 April 2017

2017-04-07T12:04:53Z

← Older revision		Revision as of 12:04, 7 April 2017
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	* Gross value added (GVA).		* Gross value added (GVA).
	* Insolvency.		* Insolvency.
		+	* Investment.
	* Net Present Value.		* Net Present Value.
	* Working capital.		* Working capital.

Designing Buildings at 12:21, 11 January 2017

2017-01-11T12:21:31Z

← Older revision		Revision as of 12:21, 11 January 2017
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	To maintain profitability in the construction industry, businesses must overcome the challenges posed by volatile material, labour and equipment costs and the complexity and risk of bidding on projects with long durations against tight competition.		To maintain profitability in the construction industry, businesses must overcome the challenges posed by volatile material, labour and equipment costs and the complexity and risk of bidding on projects with long durations against tight competition.
		+
		+	The construction industry is notoriously susceptible to changes in economic outlook, and regularly goes through booms and busts as it is used to hold back or push forward the wider economy. The [https://www.glenigan.com/sites/default/files/UK_Industry_Performance_Report_2015_883.pdf 2015 UK Industry Performance Report] suggested that the profitability of the construction industry was around 3%, up from around 2% the previous year, but well the peak of 9.9% in 2009.

	= Profitability ratios =		= Profitability ratios =
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	However, some general techniques that businesses can adopt to increase profitability include:		However, some general techniques that businesses can adopt to increase profitability include:

−	* Having a thorough understanding of and control of fixed cost overheads such as; rent, utilities, equipment, salaries, and so on.
−	* Maintaining a tight control on variations and change orders.
−	* Use of accounting software and establishing robust accounting practices so that invoices and so on can be processed accurately and efficiently.
	* Effective analysis of potential new projects prior to tendering.		* Effective analysis of potential new projects prior to tendering.
	* Reflecting on previous projects to make improvements and efficiencies.		* Reflecting on previous projects to make improvements and efficiencies.
	* A good understanding of risks and mitigation strategies.		* A good understanding of risks and mitigation strategies.
		+	* Accurate cost planning.
		+	* Control of fixed cost overheads such as; rent, utilities, equipment, salaries, and so on.
		+	* Making more effective use of resources.
		+	* Improving productivity.
		+	* Reducing waste.
		+	* Maintaining a tight control on variations and change orders.
		+	* Use of accounting software and establishing robust accounting practices so that invoices and so on can be processed accurately and efficiently and cash flow maintained.
	* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.		* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.
	* Investing in new technologies and systems and adapting them effectively to the business.		* Investing in new technologies and systems and adapting them effectively to the business.

Designing Buildings at 12:11, 11 January 2017

2017-01-11T12:11:18Z

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	= Increasing profitability =		= Increasing profitability =

−	Strategies for increasing profitability will vary depending on the type of business, the ~~rate~~ of competition, the market ~~situation~~, and so on. ~~Some general techniques that businesses can adopt to try and increase profitability include:~~	+	Strategies for increasing profitability will vary depending on the type of business, the nature of competition, the state of the market, and so on.

−	* Having a thorough understanding of ~~the~~ fixed cost overheads ~~(i.e.~~ rent, utilities, equipment ~~loans~~, salaries, ~~website administration)~~.	+	However, some general techniques that businesses can adopt to increase profitability include:
−	* Maintaining a tight control on variations and change orders ~~which can increase revenue~~.	+
−	* Use of accounting software and ~~establishment of~~ robust accounting practices so that invoices and so on can be processed accurately and ~~in a timely manner~~.	+	* Having a thorough understanding of and control of fixed cost overheads such as; rent, utilities, equipment, salaries, and so on.
−	* Effective analysis of new ~~jobs and reflecting~~ on previous projects to make improvements and efficiencies.	+	* Maintaining a tight control on variations and change orders.
		+	* Use of accounting software and establishing robust accounting practices so that invoices and so on can be processed accurately and efficiently.
		+	* Effective analysis of potential new projects prior to tendering.
		+	* Reflecting on previous projects to make improvements and efficiencies.
		+	* A good understanding of risks and mitigation strategies.
	* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.		* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.
	* Investing in new technologies and systems and adapting them effectively to the business.		* Investing in new technologies and systems and adapting them effectively to the business.

Designing Buildings at 12:07, 11 January 2017

2017-01-11T12:07:31Z

← Older revision		Revision as of 12:07, 11 January 2017
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	= Introduction =		= Introduction =

−	~~Profitability is~~ the profit-earning capability of a business. When all expenses and taxes have been paid, the revenue that is left is the profit. It is imperative that a business is able to generate profit in order to sustain itself. In construction, businesses must overcome the challenges posed by high equipment costs and bidding on jobs against tight competition, in order to maintain profitability.	+	The term 'profitability' refers to the profit-earning capability of a business, product, project or programme. When all expenses and taxes have been paid, the revenue that is left is the profit.

−	To ~~increase~~ profitability, a business must determine which ~~areas~~ of their ~~financial strategy~~ are proving successful and which ~~ones~~ require improvement. An effective profitability strategy can only be developed if the key factors determining profitability are understood.	+	To maximise profitability, a business must determine which of their activities are proving successful and which require improvement. An effective profitability strategy can only be developed if the key factors determining profitability are understood.
		+
		+	To maintain profitability in the construction industry, businesses must overcome the challenges posed by volatile material, labour and equipment costs and the complexity and risk of bidding on projects with long durations against tight competition.

	= Profitability ratios =		= Profitability ratios =

−	~~There are many different ways that~~ profitability can be ~~analysed. Profitability ratios~~ measure the ability of ~~the~~ business to generate revenue ~~compared~~ to the ~~amount of~~ expenses incurred.	+	A number of profitability ratios can be used to measure the ability of a business to generate revenue relative to the expenses incurred.
−		+
−	~~=== Net profit margin ===~~	+
−		+
−	~~Net profit margin measures the business’ ability to generate revenue. The formula is as follows:~~	+
−		+
−	~~Net profit margin = (net income / net sales) x 100~~	+
−		+
−	~~=== Gross profit margin ===~~	+
−		+
−	~~Gross profit margin measures the cost of production. The formula is as follows:~~	+
−		+
−	~~Gross profit margin = (gross profit / net sales) x 100~~	+
−		+
−	~~=== Operating margin ===~~	+
−		+
−	Operating margin is a measure of the percentage of revenue left after covering additional operating expense, i.e. those unrelated to the actual work itself, such as office rent. The formula is as follows:	+

−	Operating margin = (operating profit / net sales) x 100	+	* Net profit margin measures the business’ ability to generate revenue. Net profit margin = (net income / net sales) x 100.
		+	* Gross profit margin measures the cost of production. Gross profit margin = (gross profit / net sales) x 100.
		+	* Operating margin is a measure of the percentage of revenue left after covering additional operating expense, i.e. those unrelated to the actual work itself, such as office rent. Operating margin = (operating profit / net sales) x 100

	= Increasing profitability =		= Increasing profitability =

Editor at 12:15, 10 January 2017

2017-01-10T12:15:07Z

← Older revision		Revision as of 12:15, 10 January 2017
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	* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.		* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.
	* Investing in new technologies and systems and adapting them effectively to the business.		* Investing in new technologies and systems and adapting them effectively to the business.
−
−	~~--[[User:The_Institution_of_Civil_Engineers\|The Institution of Civil Engineers]]~~

	= Find out more =		= Find out more =

Editor at 12:14, 10 January 2017

2017-01-10T12:14:31Z

← Older revision		Revision as of 12:14, 10 January 2017
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	* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.		* Implementing staff training so that employees can grow their skills and responsibilities rather than finding work elsewhere.
	* Investing in new technologies and systems and adapting them effectively to the business.		* Investing in new technologies and systems and adapting them effectively to the business.
		+
		+	--[[User:The_Institution_of_Civil_Engineers\|The Institution of Civil Engineers]]

	= Find out more =		= Find out more =