Success means different things to different businesses. It also means something different to a business at different stages — the goals you set for year 1 and year 25 will be worlds apart. Along the way, your focus might shift from not accruing more debt to breaking even to making any profit to making greater profit every year and, eventually, to becoming a leader in your industry.
Measuring Success
Traditionally, profit is considered the primary measurement of an AEC firm’s success. Gross profit margin (GPM) provides a simplified snapshot of a firm’s financial health, making it the go-to metric against which to evaluate operations and set subsequent goals. But GPM is just that — a snapshot — and shouldn’t be considered the only indicator of profitability.
Take net labor multiplier (NLM), for instance. NLM is the amount of revenue earned for every dollar spent on labor. That means it demonstrates the direct relationship between a firm’s most valuable asset and its bottom line.
Using NLM, project and operations managers can see how efficiently labor contributes to a project’s profitability. In turn, that data can inform resource management decisions for similar projects in the future.
The Power of Prediction
While understanding a project’s NLM after the fact can inform future project decisions, tracking this metric throughout the project lifecycle gives teams the power to increase profitability during production. That’s where BST Insights comes in — our AI-powered predictive data solution designed specifically for the AEC industry.
BST Insights complements your current ERP system, using your data to provide insights on factors that are driving down a project’s NLM. Our patent-pending solution acts as a smart GPS for projects, tracking various signals against past events to predict the outcome so your team can proactively adjust to avoid roadblocks.
Ready to start turning your ERP data into more profitable project outcomes? Click below for more info on how BST Insights can improve the overall health of your project portfolio.
