Operating expenses have a significant impact on your accounts. It is therefore essential for you, a company in the construction sector, to analyze the figures to improve the accounting result of your company, and in particular your margin. But first, let's take the time to understand what operating expenses contain and see how they can be optimized.

How to identify operating expenses in the construction sector?

Operating expenses, also known as operating expenses or operating expenses, include all the costs necessary for the daily operation of your business.

Fixed cost and variable cost

The distinction between fixed and variable costs is crucial. Fixed costs remain relatively constant, regardless of the volume of activity of your business. They include items such as rents, the insurances, and the wages administrative staff.

On the other hand, variable costs fluctuate according to your level of activity. In the construction sector, these costs may include fuel expenses for construction vehicles, office supplies, the cost of raw materials and equipment, as well as some labor costs. This also includes costs that vary based on your turnover, such as taxes and associated taxes.

Expenses specific to the construction sector

In addition to the points mentioned above, the province's harsh climatic conditions must also be considered, which can lead to additional costs for heating construction sites in winter or for cold protection equipment. Additionally, strict workplace safety and environmental regulations can create additional burdens on training, safety equipment, and waste management. Seasonal fluctuations in activity, characteristic of the construction sector in Quebec, can also influence the structure of operating expenses, requiring flexible management of resources.

These are all points to master correctly in order to carry out a clear and concise accounting analysis relating to the functioning of your business.

Detailed fixed cost analysis

Let's focus more on fixed costs. Indeed, they represent a significant portion of operating expenses in the construction sector. A detailed analysis of these costs is essential to identify optimization opportunities and ensure the sound financial management of your business.

1. The rents

Rents and rental expenses are often one of the most important items of fixed expenses. This includes not only the rent of administrative offices, but also potentially that of warehouses for the storage of equipment and materials. In the Quebec context, where real estate prices can vary considerably between regions, it may be interesting to consider options such as sharing space or flexible renting to reduce these costs.

2. Insurance and permits

Insurance and licenses represent another essential fixed cost item in the construction sector. Civil liability insurance, construction insurance, operating licenses, work permits from your service providers,... These are recurring fixed expenses to operate legally in the province.

3. Wages

Salaries for administrative staff and incumbents generally represent a significant portion of fixed costs. This includes the salaries of the manager, accounting staff, human resources, permanent staff as may be the case for site managers and administrative support. In Canada, the competition for talent is high, so it is important to find a balance between offering competitive salaries and maintaining a viable cost structure. An attractive option is to provide internal training to develop the skills of your existing staff.

4. The hardware

Depreciation for heavy equipment, long-term rental costs for construction equipment and regular maintenance costs are - for example - fixed costs to consider in your accounting calculations. To maximize the lifespan of your equipment, and thus reduce the costs associated with this expense item, a efficient allocation of resources will allow you to take better care of your vehicles and machines. If, however, you need to replace them, it is possible to consider rental options, especially for specialized machines that are not used regularly.

How can variable costs be managed effectively?

To be able to plan better and obtain a better accounting result, in particular to have a more comfortable margin, it is important to comb through the various expenditure items.

1. The workforce

Workforce on construction sites often accounts for the largest portion of variable costs, especially as recruiting qualified personnel is becoming more and more complicated. In practice, this involves careful planning of work schedules with overtime tracking and effective distribution of tasks. Using advanced project management tools can help you better predict workforce needs and quickly adjust your workforce as projects progress.

In addition, subcontracting remuneration is often used to manage peaks in activity or for specialized work. Although flexible, this variable cost requires the establishment of clear contracts with expectations in terms of quality, deadlines and costs.

2. The hardware

Fluctuations in building material prices can have a significant impact on your margin. To effectively manage these costs, it is important to set up a system for monitoring market prices, to anticipate purchases and to develop solid relationships with several suppliers.

On the consumables side, in the Quebec context, where distances can be long and winter conditions can be severe, effective management of fuel consumption - for example - can generate significant savings.

4 strategies to apply to reduce operating expenses

To reduce your expenses, it may be interesting to combine several strategies mentioned below. They will allow you to save money fairly quickly and in a sustainable way.

Why use a digital tool to optimize loads?

Integrated project management and accounting software allows centralize all information related to projects, from planning to invoicing, including cost monitoring. They thus offer a traceability essential and allowautomate numerous administrative tasks, allowing savings and minimizing the risk of errors.

This type of tool makes it possible in particular toensure real-time monitoring of the construction site, both in terms of equipment and labor. This approach Eliminate delays, in particular for the CCQ vacation pay, in cost accounting and offers an updated view of the financial situation of each project. These analyses can reveal spending trends, identify the most important cost areas, and even predict future resource needs.

Conclusion

In conclusion, these technologies not only offer better visibility into financial transactions, but also the ability to respond quickly to changes and anticipate delays effectively. For the construction sector in Quebec, these tools are a strategic advantage, especially if you are looking to maximize your operational efficiency and your profitability.

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