The main task of the enterprise in a market economy is to fully satisfy the needs of the national economy and citizens in its products, works and services with high consumer properties and quality at minimal cost, increasing the contribution to accelerating the socio-economic development of the country. For the implementation of its main task, the company provides an increase in profits.
Profit is the primary incentive to create new or develop existing enterprises. The opportunity to make a profit encourages people to look for more efficient ways to combine resources, to invent new products that may be in demand, to apply organizational and technical innovations that promise to increase production efficiency. Working profitably, each enterprise contributes to the economic development of society, contributes to the creation and enhancement of social wealth and the growth of the well-being of the people.
And no matter what in economic analysis the performance of enterprises can be assessed by such indicators as the volume of output, sales and profits, the values of these indicators are not enough to form an opinion about the effectiveness of its activities. This is due to the fact that these indicators are absolute characteristics of the enterprise, and their correct interpretation in terms of performance evaluation can only be carried out in conjunction with other indicators that reflect the funds invested in the enterprise. Therefore, to characterize the efficiency of the enterprise as a whole, the profitability of various areas of activity (economic, financial, entrepreneurial) in economic analysis, profitability indicators are calculated.
The profitability of an enterprise is an indicator of the efficiency with which fixed assets are used, calculated as the ratio of profit to the average cost of fixed and current assets.
Increasing the profitability of the enterprise and optimizing costs, in order to increase income, in a situation of increased competition is a paramount task.
As you know, the main source of free cash of the enterprise is the proceeds from the sale of manufactured products. In this regard, the key activity of the entity is to increase the profitability of production by reducing costs and observing the savings regime, as well as the efficient use of the resources available to the enterprise.
Thus, in order to improve the mechanisms for the formation and distribution of profits and increase profitability, it is recommended to develop measures that increase profitability. These activities are listed in the table.
Measures to increase profitability
|
Indicators of profitability (profitability) |
Cost types that determine profitability |
Measures to reduce costs |
|
1. Profitability of production |
Cost of sales of products; Administrative expenses; Marketing expenses |
Cost reduction: 1. reduction of resource costs; 2. control of production volumes; 3.continuous scientific and technological progress (new technology, production automation, technology improvement, innovation); 4. expansion specialization and cooperation; 5.Increased productivity. Reduced administrative costs: |
2. rational use of electricity;
3. reducing the cost of renting premises;
4. decrease in the number of managers and administrators.
Reduced marketing costs:
1. optimization of costs for transportation of products; 2. improvement of loading and unloading operations;
2. Profitability of fixed assets
The cost of fixed assets
1. increasing the intensity of the use of fixed assets;
2. increasing the extensiveness of the load of the OF, through their technical improvement;
3. automation and mechanization of production processes, and replacement of obsolete equipment with more advanced ones.
3. Return on current assets
current assets;
Future spending
1. improvement of the working capital management system;
2. speed up turnover working capital;
3. change in technology and applied equipment in industries serving production;
4. rationality
use of working capital
4. Profitability of total resources
Non-current assets
current assets
payroll fund
1. reducing the amount of redundant equipment and the rapid involvement in the production of uninstalled equipment;
2. work under the optimal mode of the technological process;
3. improvement of the production management system;
5. profit growth due to economies of scale;
6. improving the efficiency of the use of enterprise resources;
7. providing employees with unpaid leave (at the request of the employee);
8. suspension of work or downtime;
9. reduction in wages;
10. reduction in the number of working hours per day and working days per week;
11. automation of production processes.
5. Profitability of personnel
Average headcount
1. maintaining the optimal number of working personnel;
2. reduction of production costs, which are related and do not participate in production;
3. improving the skill level of employees;
4. use of progressive wage systems;
5. increasing the interest of workers in improving productivity;
6. increase of labor motivation.
Based on all of the above, it can be argued that the implementation of these measures will increase the volume of profits, the level of profitability and, ultimately, will lead to an increase in the efficiency of the enterprise as a whole.
The main measure that will improve profitability and performance is the improvement of the production management system. But since the management process consists of planning, organization, motivation and control, it can be argued that this event includes many other activities that reduce costs when using enterprise resources involved in production.
These activities include:
Production volume control;
Automation and mechanization of production processes, and replacement of obsolete equipment with more advanced ones;
Increasing the interest of workers in improving productivity;
Improving the efficiency of the use of enterprise resources, etc.
Based on the above, we can conclude that the efficiency of the enterprise directly depends on the efficiency of production management. AND important condition to achieve this result, is the cohesion of all components of the management process, only in this case the company will be able to optimize production processes and, accordingly, to achieve maximum production efficiency.
So main goal any enterprise should not be making a profit, which is relevant only in the short term, but preserving and developing the business, which will make it possible to make a profit in the future.
And an important feature of a developed and competitive enterprise is that its management, in order to maximize profits, sets itself the task of not minimizing costs, but optimizing them, which is achieved through effective management.
Literature:
1. Abryutina, M.S. Enterprise Economics: textbook / M.S. Abryutina. - M .: Publishing house "Delo and Service", 2010. - 585 p.
2. Kovalev V.V. Analysis of enterprise funds and their use // Accounting. - 2000. - No. 10 - S. 10-15.
3. Efimova O.V. Analysis of profitability of capital // Accounting. - 2001. - No. 5 - S. 16-20.
Methodology for determining the planned profit by the method of a simple account and analytical method
Algorithm for planning profit and searching for reserves for its growth
Profit - the most important indicator final financial results of the enterprise. It is defined as the difference between the proceeds from the sale of products and their cost.
Profit planning is the process of developing a system of measures to ensure its formation in the required volume and effective use in accordance with the goals and objectives of the enterprise development.
Profit planning is necessary in order to:
Profit is planned separately for all types of activities of the enterprise. Planning objects are elements of profit before taxation. At the same time, special attention is paid to planning profit from sales.
In a steadily developing economy, profit is planned for a period of 3 to 5 years, with relatively stable prices and predictable business conditions, current planning is common within 1 year. In an unstable economic and political situation, planning is possible for a short period - a quarter, half a year.
3 main methods of profit planning:
1) direct counting method;
2) the method of interrelation of revenue, costs and profits (the "direct costing" method);
3) analytical method.
The method of direct counting is most common in enterprises. It is used, as a rule, with a small assortment of products, when justifying the creation of a new or expanding an existing enterprise, in the implementation of an investment project.
The direct account method determines the planned profit in the coming period according to the following stages (Fig. 1).
Rice. 1. Determination of the planned profit by the method of direct counting
The essence of the direct account method is that profit is calculated as the difference between the proceeds from the sale of products (at appropriate prices, excluding VAT and excises) and its full cost,
Planned profit (P) is calculated by the formula:
P \u003d (O × C) - (O × C),
where O is the volume of output in the planned period in physical terms;
C - price per unit of production (net of VAT and excises);
C is the total cost of a unit of production.
Profit on commodity output (P t) is planned on the basis of the cost estimate for the production and sale of products, which determines the cost of commodity output of the planned period:
P t \u003d C t - C t,
where Ct is the cost of commodity output of the planned period in current selling prices (excluding VAT, excises, trade and sales discounts);
St - full cost marketable products planned period.
Note!
It is necessary to distinguish the planned amount of profit per commodity output from the profit planned for the volume of products sold.
Profit on products sold (Pr) in general view calculated by the formula:
P p \u003d B p - C p,
where Вр is the planned revenue from the sale of products in current prices (excluding VAT, excises, trade and marketing discounts);
C p is the total cost of products sold in the coming period.
In more detail, the profit from the volume of products sold in the planned period is determined by the formula:
P r \u003d P he + P t - P ok,
where P he is the sum of the profit of the balances of unsold products at the beginning of the planning period;
P t - profit from the volume of output of marketable products in the planned period;
P ok - profit from the balance of unsold products at the end of the planning period.
For your information
This calculation method is applicable to the enlarged direct method of profit planning, when it is easy to determine the volume of products sold in prices and at cost.
The analytical method of profit planning is used with a large assortment of products, and also as an addition to direct method for the purpose of its verification and control (Fig. 2). Profit is determined not for each type of product manufactured in the coming year, but for all comparable products as a whole. Profit on incomparable products is determined separately.
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Rice. 2. Determination of the planned profit by the analytical method
Note!
The advantage of this method is that it allows you to determine the influence of individual factors on the planned profit.
The basis of the direct costing method is the grouping of costs into variable and conditionally fixed costs. The relationship between sales volume (thousand rubles) and cost structure (thousand rubles) is shown in fig. 3.
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Rice. 3. Relationship between sales volume and cost structure
The company will make a profit if the volume of sales of products exceeds a certain critical amount of revenue.
Consider how to plan profit, using the example of a conditional enterprise.
AVS LLC is planning its production activities on the basis of contracts concluded with consumers of products and services, as well as suppliers of material, technical and other resources.
The purpose of the organization is to satisfy the need for its products, works, services and make a profit.
Main activities: construction, decoration and repair of offices and apartments; electric installation work; roofing; carpentry; installation of steel structures; stone work; execution of design projects; site preparation.
The organization specializes in the construction of large buildings, so its business partners are mainly private individuals.
Dynamics of profit is presented in table. one.
Table 1
Dynamics of profit of AVS LLC
|
Indicators |
Unit rev. |
Values |
Changes |
|||
|
2014 |
2015 |
absolute |
relative, % |
|||
|
Revenue from works, services |
||||||
|
Cost of works, services |
||||||
|
Selling expenses |
||||||
|
Sales profit |
||||||
|
Other income |
||||||
|
other expenses |
||||||
|
Gross profit |
||||||
|
income tax |
||||||
|
Net profit |
||||||
|
Profitability of sales |
||||||
|
Product profitability |
||||||
Analyzing the data table. 1, we see that the sales profit increased by 16.4%. This was driven by an 8.4% increase in operating revenue and a 25.6% decrease in selling expenses. Net profit also increased by 23.9%. Profitability of sales and products increased by 2.5% and 4.0%, respectively.
Consider the main methods of planning profit from the sale of marketable products.
As mentioned earlier, ABC LLC specializes, among other things, in the construction of frame prefabricated houses. The income from this type of service is about 50% of the total profit of the enterprise. The price of one house is 1,694,915 rubles, the production cost according to the report for the past year is 1,303,781 rubles.
In 2014, 15 houses were built, in 2015 - 18.
Let's say that next year 20 houses will be built, the reduction in production cost will be 5%, the cost of selling products will be 0.5% of the products sold at production cost.
The production cost of a unit of production in the planned year will be:
1,303,781 × 95 / 100 = 1,238,591.95 rubles,
the volume of marketable products in the planned year at the production cost:
1,238,591.95 × 20 = 24,771,839 rubles
In order to determine the total cost of production, we calculate the amount of expenses for the sale of products:
24,771,839 × 0.5 / 100 = 123,859.2 rubles
Therefore, the volume of sales of products at full cost will be:
24,771,839 + 123,859.2 = 24,895,698.2 rubles
The volume of sales in physical terms is 20 units, and in wholesale prices - 33,898,300 rubles. (20 × 1694915).
Under these conditions, the profit from the sale of products in the planned year will be:
33,898,300 - 24,895,698.2 = 9,002,601.8 rubles
Calculation of profit by the direct account method is simple and accessible. However, it does not allow to identify the influence of individual factors on the planned profit and, with a large range of products, is very laborious.
1. We determine the basic profitability, i.e. the ratio of the expected profit to the full cost of comparable marketable products (Table 2).
table 2
Basic profitability calculation
|
Indicators |
Unit rev. |
Results for 9 months |
Plan IV quarter |
Expected performance for the current year |
|
Quantity of marketable products |
||||
|
Comparable commercial output of the past year: |
||||
|
at current prices (without VAT, excises and sales tax) |
||||
|
at full cost |
||||
|
Profit per volume of comparable marketable output |
||||
|
Adjustments to the amount of profit due to price changes that took place during the year (+/-) from the beginning of the year to the date of change |
||||
|
Basic profitability |
2. Since the planned year provides for the growth of comparable marketable products by 11.5%, its output at the cost of the reporting year will be:
22,895,562 × 111.5 / 100 = 25,528,551.6 rubles
Profit on comparable marketable products in the planned year, based on the basic level of profitability, will be equal to:
25,528,551.6 × 29.4 / 100 = 7,505,394.2 rubles
3. We take into account the influence of individual factors on the amount of planned profit.
The release of comparable marketable products in the planned year at the cost of the previous year is 25,528,551.6 rubles. The same comparable products, but at the full cost of the coming year - 26,075,620 rubles. (20 × 1303781). The increase in the cost of comparable marketable products amounted to 547,068.4 rubles. (26,075,620 - 25,528,551.6), and this will lead to a decrease in the planned profit.
The planned change in the product range causes an increase or decrease in the planned profit. But ABC LLC does not plan to change the assortment, so we skip this stage of calculations.
The size of the planned profit is also affected by price changes in the planning period. If prices decrease or increase, then the estimated percentage of the decrease or increase should be calculated from the volume of the relevant product. The amount received from a decrease or increase in prices will affect the decrease or increase in the planned profit.
Assume that prices for all marketable products sold are expected to increase by 6.03% in the planned year. If the planned output of marketable products, calculated in prices, is 33,898,300 rubles, then only due to this factor a profit will be made in the amount of:
33,898,300 × 6.03 / 100 = 2,044,067.5 rubles
Let's make a summary calculation of profit from product sales (Table 3).
Table 3
Summary calculation of profit calculated by the analytical method
|
Indicators |
Amount, rub. |
|
Commercial products in the planned year: |
|
|
comparable marketable products at full cost in the reporting year |
|
|
comparable marketable output at full cost in the planned year |
|
|
decrease in profit from the increase in the cost of comparable marketable products |
|
|
Profit on comparable marketable products based on basic profitability |
|
|
Increasing profits due to rising prices |
|
|
Total planned profit |
Note!
Despite the fact that the direct planning method is simpler and more accessible, the profit in it is determined as a total amount, without identifying specific reasons that affect its value. The analytical method is more complex, but it allows you to identify both positive and negative factors that affect profit.
The total planned profit of AVS LLC from the construction of frame prefabricated houses next year will be 9,002,393.3 rubles, which is certainly a positive factor. At the same time, the planned profit significantly reduces the increase in cost by 547,068.4 rubles, which is explained by the increase in prices for consumed inventory items, the increase in wages due to the increase in the minimum monthly wage and other factors.
Profit growth by RUB 2,044,067.5 planned in connection with the expected increase in prices for products sold, taking into account inflation. This factor also cannot be considered as positive, since it is impossible to predict the behavior of the buyer when the price of the goods rises.
To predict the maximum possible profit in the planned year, it is advisable to compare the proceeds from the sale of products with the total amount of costs, divided into variable, fixed and mixed (Fig. 4).
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Rice. 4. Composition of costs
Due to the small proportion of mixed costs, we will not take them into account in the calculation. The increase in profit depends on the relative decrease in variable or fixed costs.
The following calculations make it possible to determine the so-called effect of the production lever - a phenomenon when, with a change in proceeds from the sale of products, a more intensive change in profit occurs in one direction or another.
A number of indicators are used to calculate the effect or force of a lever:
The proceeds from the sale of products in 2014 amounted to 29,591,430 rubles, including variable costs - 18,944,482 rubles, fixed - 3,951,080 rubles.
Thus, with a total cost of 22,895,562 rubles. profit is equal to:
29 591 430 - 22 895 562 = 6 695 868 rubles.
If in 2015 revenue increases by 10%, which will amount to 32,550,573 rubles. (29,591,430 × 110/100), then variable costs will also increase by 10% and will be equal to 20,838,930.2 rubles. (18944482 × 110/100). At the same time, fixed costs remain unchanged, i.e. 3,951,080 rubles.
In this case, the total cost will be:
20,838,930.2 + 3,951,080 = 24,790,010.2 rubles,
32,550,573 - 24,790,010.2 = 7,760,562.8 rubles
At the same time, profit will increase by 15.9% compared to the previous year (7,760,562.8 × 100 / 6,695,868 - 100).
Therefore, with an increase in revenue from product sales by 10%, profit will increase by 15.9%.
Looking for opportunities to increase profits, it is advisable to check the impact on its growth not only variable, but also fixed costs. So, if variable costs increase by 10% - 20,838,930.2 rubles, and fixed costs - by 2% - 4,030,101.6 rubles. (3 951 080 × 102 / 100), the total amount of all costs will be:
20,838,930.2 + 4,030,101.6 = 24,869,031.8 rubles
The company will profit from:
32,550,573 - 24,869,031.8 = 7,681,541.2 rubles,
which, compared to the previous year, will increase by 14.7% (7,681,541.2 × 100 / 6,695,868), and not by 15.9%.
20,838,930.2 + 4,109,123.2 = 24,948,053.4 rubles
Profit in this case is reduced to the amount of 7,602,519.6 rubles. (32 550 573 - 24 948 053.4), i.e. increases only by 13.5% (7 602 519.6 × 100 / 6 695 868 - 100).
Based on the above calculations, we can draw the following conclusion: as fixed costs increase, other things being equal, the rate of profit growth decreases.
To do this, we exclude variable costs from the total amount of proceeds from the sale of products, and divide the result by the amount of profit.
The difference between sales and variable costs is what economists call the contribution to coverage.
The quantitative impact of operating leverage on profit can be expressed by the formula:
where O is the operating lever;
B is the contribution to the coverage;
P - profit.
Let us determine the strength of the impact of the production lever in 2015:
29 591 430 - 18 944 482 / 6 695 868= 1,6.
The indicator of the effect of the production lever is of great practical importance. If revenue from sales of products increases, for example, by 4%, then, using the indicator of the strength of the impact of the production lever, it can be determined in advance that profit will increase by 6.4% (4% × 1.6).
Based on the strength of the impact of the production lever, we can conclude: the higher the share of fixed costs and, accordingly, the lower the share variable costs with the same amount of proceeds from the sale of products, the stronger the impact of the production lever.
For your information
This does not mean that it is possible to increase fixed costs uncontrollably, since if this reduces the proceeds from the sale of products, then the company will suffer large losses in profits.
In the study of the relationship between fixed and variable costs and profits, an important role is played by the analysis of break-even production. Let's define the so-called break-even point of production and sales of products.
The break-even point corresponds to the volume of sales at which the firm covers all fixed and variable costs without making a profit. With the help of the break-even point, the threshold is determined, beyond which the volume of sales provides profitability, i.e., the profitability of products.
The sales volume corresponding to the break-even point (B) is defined as the ratio of fixed costs (Zpost) to the difference between unit and private from dividing variable costs (Zper) by sales in value terms (P):
B \u003d Z post / (1 - Z lane / P).
The sales volume of AVS LLC in 2014 was 29,591,430 rubles, including:
18 units sold products, costs per unit - 1,643,968.3 rubles. (29 591 430 / 18). The volume of sales in monetary terms at the break-even point will be:
3,851,080 / (1- 18,944,482 / 29,591,430) = 10,697,444.4 rubles.
In physical terms, the number of products sold at the break-even point is 6 units. (10,697,444.4 / 1,643,968.3).
This means that the proceeds from the sale of 6 units. products pays for all costs without forming a profit. The sale of each additional unit above 6, i.e., above the break-even point, will be profitable.
Such calculations allow you to predict break-even activity in advance.
Also, when determining a strategy, an enterprise must take into account the margin of financial strength (F), i.e., evaluate the volume of sales above the break-even level. To do this, the sales volume (P) with the exception of the sales volume at the break-even point (B) should be divided by the entire sales volume:
F \u003d (P - B) / P × 100.
Let's determine the margin of financial strength of AVS LLC:
(29,591,430 - 10,697,444.4) / 29,591,430 × 100 = 63.8%.
Therefore, the company can reduce production and sales by 63.8% before the break-even point is reached. Such a high margin of financial strength should be taken into account in the process of forming the company's strategy.
For your information
Having a large margin of financial strength, the company can develop new markets, invest in both securities and in the development of production.
So, factor analysis allowed to identify reserves that will help increase the net profit of the enterprise. This is a cost reduction and a change in the structure of products sold.
Concerning organizational structure enterprises, it is advisable to make some changes to it (Fig. 5).
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Rice. 5. Proposals for changing the organizational structure of AVS LLC
Now there is no planning department in AVS LLC, which should be in every enterprise that wants to be competitive.
Calculate the effectiveness of the implementation of the planning department. To do this, first determine the amount of costs that will be needed to implement the planning department:
3 people × 42 thousand rubles. = 126 thousand rubles;
126 thousand rubles × 34% / 100% = 43 thousand rubles.
The total cost of wages will be:
126 thousand rubles + 43 thousand rubles. = 169 thousand rubles.
Now let's calculate economic indicators(in value terms) the work of the department. The increase in the volume of sales of products, services (sales volume; V) is determined by the formula:
V = V cf. days × β × D,
where V cf. days — average daily revenue, thousand rubles;
β is the relative increase in the average daily revenue, %;
D - the number of days of accounting for the volume of revenue.
The increase in profit (P pr) is determined by the formula:
P pr \u003d V × P r,
where Pr - profit per 1 ruble of proceeds from the sale of products, services, rubles.
Now let's calculate the current (annual) economic effect (E) from the introduction of the department:
E \u003d P - Z r,
where З р - current costs for carrying out activities, thousand rubles.
Let's calculate the planned revenue from the work of this department (Table 4).
Table 4
Calculation of the effect of the implementation of the planning department
|
Indicator |
Unit rev. |
Indicator value |
|
Average daily revenue before the implementation of the planning department (29,591,430 thousand rubles / 365 days) |
||
|
Relative percentage increase in average daily revenue |
||
|
Number of days of posting revenue after the implementation of the planning department |
||
|
Profit per 1 rub. product sales |
||
|
Planning department implementation costs |
||
|
Additional revenue |
||
|
Profit Growth |
||
|
Current (annual) economic effect |
The result of the financial and economic activity of the enterprise depends on how reliably the planned profit is determined.
Based on the results of calculating the planned profit by the analytical method, the following conclusions can be drawn:
An increase in the cost of production and an increase in prices for these products are factors that will adversely affect financial condition organizations in the future.
To maximize profit, the share of variable and fixed costs has been changed.
This method allows the company to plan for the future the size of the increase in profits depending on the results of production and take measures in advance to change the value of variable and fixed costs in one direction or another.
Based on the analysis, taking into account the found profit growth reserves, AVS LLC developed recommendations for increasing the company's profit for the next year. It was proposed to create a planning department, the economic effect of the implementation of this proposal was calculated.
Approximate calculations of the organization's planned profit are important not only for the enterprises themselves and organizations that produce and sell products (services), but also for shareholders, investors, suppliers, creditors, banks associated with the activities of this enterprise, participating with their own funds in the formation of its authorized capital. Therefore, planning the optimal size of profit in modern conditions- the most important factor in the success of enterprises and organizations.
K. V. Salnikova,
cand. economist, associate professor
For any enterprise, the main goal is to maximize profits, increase the market value of the enterprise in the interests of their owners. Enterprise adaptation to market conditions requires both a change in the functions performed and an internal organizational restructuring, first of all, supplementing the organizational structure with new links, revising the entire system of distribution of rights, powers and responsibilities.
Today, the firm needs both low cost and differentiation aimed at increasing utility. Low costs help a firm create a differentiating advantage, either by lowering the price to consumers or by investing in products, services, people, or image enhancement.
When analyzing ways to increase profitability, it is important to separate the influence of external and internal factors. Indicators such as the price of a product and a resource, the volume of resources consumed and the volume of production, profit from sales and profitability of sales are closely functionally related to each other. The main ways to increase the profitability of goods are usually considered as alternative to each other. Thus, efforts to increase sales require investment, and efforts to increase efficiency just contribute to obtaining cash.
As a result of the current economic crisis, most sectors of the world economy are in a very deplorable state. This crisis hit the construction and manufacturing sectors especially hard.
Profitability indicators in construction organization show the level of performance of the company. Profitability shows whether the company's activities are profitable.
Profitability in the construction industry is divided into three levels: estimated, actual and planned.
Depending on what goals were set, a number of profitability indicators are used in the practice of construction enterprises.
To determine the main directions for searching for reserves to increase profits and increase profitability, the factors influencing them are classified according to various criteria (Figure 33).
Figure 33 - Factors affecting the value of profitability
TO external factors include natural conditions, state regulation prices, tariffs, interest, tax incentives, penalties, inflation, etc. These factors do not depend on the activities of enterprises, but can have a significant impact on the amount of profit and profitability.
Internal factors are divided into production and non-production. Production factors characterize the availability and use of means and objects of labor, labor and financial resources and in turn can be divided into extensive and intensive.
Extensive factors affect the process of making a profit through quantitative changes: the volume of funds and objects of labor, financial resources, equipment operation time, number of staff, working hours, etc. Intensive factors affect the formation and increase in profits, increasing profitability through "qualitative" changes: increasing the productivity of equipment and its quality, the use of advanced materials, improving processing technology, accelerating the turnover of working capital, improving the skills and productivity of personnel, reducing the labor intensity and material intensity of products, improving the organization of labor and more effective use financial resources, etc. Non-production factors include, for example, supply and marketing and environmental activities, social conditions work and life, etc.
In construction and installation organizations in recent years, there has been a very low profitability. The average rate of return does not exceed 6.5%. And for normal operation, the profitability of construction organizations should be at least 10 - 15%. Of these, 3 - 6% is spent only on paying taxes and on maintenance. social sphere. Low profitability, unprofitability of construction organizations could arise for various reasons. In most construction organizations, overhead costs are 30 - 40% higher than the amounts they receive for these purposes from customers. Therefore, this business became unprofitable.
Why is this happening? Why did the profitability in construction begin to decline? For several decades, the amount of overhead costs has not changed. But the volume of construction and installation work is growing, wages have also grown. The cost of operating machinery and other equipment has also increased. But the amount remains the same as before.
The level of profitability is also affected by the construction time. Due to the lack of funds from customers, the construction time is increasing.
The decline in profitability was also affected by the financial crisis. The demand for construction has declined greatly and therefore, in order to interest the buyer, as well as in order to be in demand on the market, construction companies are forced to offer the best possible conditions for customers. Construction companies offer all sorts of discounts, various gifts. They also offer apartments already finished.
To increase profitability and for the construction business to flourish, construction organizations need to try to reduce production costs, improve the organization of production and labor. And also try to use materials as economically as possible.
For a successful project, you need to draw up a good business plan. It must correctly set the tasks, provide for all the risks, and also meet the construction deadlines. It is necessary to correctly calculate all the costs of this construction.
And most importantly, profitability in construction will increase if there is demand! And in order for there to be demand, it is necessary to build what the consumer needs, to choose the right place for construction. These will be the first steps on the way to a successful business.
Increasing the level of profitability requires the mobilization of internal reserves of production, consistent work aimed at improving the use of all types of resources, reducing the cost of work performed due to this, and increasing the amount of profit received.
Every construction organization needs to form targeted programs aimed at increasing the profitability of production. They should provide for specific measures to reduce production costs, introduce resource-saving equipment and technology for performing work, improve the organization of production and labor, more productive use of transport and mechanisms, increase the shift work of the most productive equipment, and economical consumption of materials.
