Managing Construction 2

Question 1

On every bid, you need to know your

Answer 1

Break Even Cost (Direct Cost plus Overhead)

Question 2

ROI consists of two parts. The simple formula is

Answer 2

(Revenue-Direct Costs-Overhead) / Revenue

Question 3

The other critical part of the ROI calculation is the:

Answer 3

CASH TO CASH CYCLE.

Question 4

Explain the CASH TO CASH CYCLE

Answer 4

If our working capital and profit comes back to us twice as fast, we have made two times the gross profit on the same amount of profit.

Question 5

What is an additional drawback on a slow CASH TO CASH CYCLE?

Answer 5

If we have to wait on our cash and have to use a credit line, interest charges immediately reduce our profit.

Question 6

Low risk projects tend to be completed:

Answer 6

quicker, thus faster profits. If you complete two like projects a year, your profitability will be much better.

Question 7

Lower risk jobs tend to:

Answer 7

have better gross and net profit margins.

Question 8

Lower risk jobs are usually

Answer 8

small, which you can do with a small crew.

Question 9

Risk v. Reward states that for every:

Answer 9

increased unit of risk, an increased unit of reward should be given, in a 1 to 1 ratio.

Question 10

If we choose not to seek the type of business we want, we will:

Answer 10

be given work we don’t want.