Thought Leaders: Can prefab preserve construction margins? – BizWest

2022-06-15 11:20:57 By : Mr. Kim Yang

By Curtis R. Olson and Reed Sellers - Wipfli — March 30, 2022

By Curtis R. Olson, CPA, CCIFP, Partner and Reed Sellers, CPA, CCIFP, Partner

Demand for construction services is strong, and for many backlog indicators have improved since the start of the COVID-19 pandemic. But busy doesn’t always mean profitable.

Elevated labor and materials costs are eroding profit margins. Competition for jobs is fierce — and often focused on the lowest bidder.

Every project detail must be executed perfectly for construction firms to hold onto their hard-earned dollars.

This isn’t new. But some contractors aren’t taking it as “business as usual.” Instead of riding the waves, they’re shifting their business models. 

With prefabrication and modular construction, building components or entire buildings are constructed in a shop or warehouse, then delivered to the job site. (Some assembly required)

Sifting the location — and environment — where construction occurs gives contractors more control over essential elements that affect performance and profitability:

All of these factors can preserve margins — and help construction firms win business and maintain profit margins. Cost and risk mitigation aren’t just favorable inside the firm; they build stability that contractors and clients value, too.

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