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project management quality Resource IndexPopular project management quality Resources:New Horizons - Online ANYTIME Learning quality control project management Popular Articles:
Latest Project Management News and Articles..come back soon for more updates...Rally's Michelle Sliger to Address Agile Team Support at the Rocky Mountain Project Management Symposium (SYS-CON Media) Collaborative Software Development on Demand Rally's Michelle Sliger to Address Agile Team Support at the Rocky Mountain Project Management Symposium (PR Newswire via Yahoo! Finance) ARTiSAN Studio Chosen by Serco to Develop and Maintain Advanced Traffic Management System (PR Newswire via Yahoo! Finance) Construction Contracting is a Variable Cost Business Construction Contracting is a variable cost business. We are one of the few industries that have such a cost structure. Many other businesses have a fixed cost basis. The determining factor to classify a business is to look at the % of fixed cost (cost that won't change when a sale is made) and variable cost (cost caused by a sale) of the business. Add these two percentages together, subtract from 100% and what remains is profit. To define our terms: Over 50% fixed costs - we consider this a fixed cost business such as airlines, computer software manufacturers, restaurants just to name a few. They have to drive volume to make the economics work. To pay their fixed cost every month, they must have a certain volume. Under 50% fixed costs - we consider this a variable cost business. As a side note, many service businesses are considered in this category. This means that the most of the cost of the product or service is caused by the sale. Once a company covers its fixed costs or “nut” ,then the company enjoys greater profits. They grow both as a percentage and total dollars. |
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