Reduce risk to increase profit

Anna Turner recommends strong systems to help efficiency.

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Have you gone through a period where all jobs seem to be going bad, and not one seems to be running smoothly? It's a sign to take a good look at your systems and identify ways to manage and reduce risk.

Start at the beginning: pricing

Try to imagine what could go wrong on a project and write a clear contract to mitigate those potential problems. Start by defining the parameters of the contract, listing inclusions and exclusions. Write detailed descriptions of the work, pointing out differences between your allowances and any contract documents or discussions you had with the client on site. The more detailed and clear you can be in the contract and Bill of Quantities, the less room there is for misunderstanding.

Include a 'force majeure' clause in the contract, excusing you from fulfilling the contract in the event of unforeseen, extraordinary circumstances beyond your control, such as floods. Additionally, write specific clauses stating the outcome of potential issues, like hitting rock. If you do hit rock the client then knows they have no option but to pay for the additional work.

Take care to review the profit margin on each project before submitting the quote. Make sure the margin, at a minimum, is enough to cover overheads and small mistakes and still leave you with a nett profit. Also, make sure the margin is greater on higher-risk projects. Don't take on work if there isn't sufficient profit to justify the risk.

Never take on a project you're not capable of completing. Make sure you have enough qualified staff to meet the deadlines, and make sure you take out appropriate insurance.