Running a Profitable Construction Company: Revisited Break-Even Analysis

Abstract

Many companies have a tendency to spread out their operations into branches and/or separate corporations. The construction industry is a good example. With work being slow in some areas, it is sometimes more profitable to spread out the company into different areas in order to absorb more work and therefore create branches to the main office. When this is done, it is important to centralize these branches and analyze them as a whole to help the corporation. In this process, the break-even analysis can be used to help analyze the operations. Consideration for a corporation having one or more branches involved in several projects takes time and teamwork. The team that is organized to help in the decision-making process needs a plan to determine how the project will affect the company and other jobs that are already in progress. With one corporation having two or more branches, it can be difficult to figure out where the company as a whole needs to be in order to turn a profit. The team must consider what each branch is doing in volume and what their break-even points are. This comes down to an important point of this research, which is “where to break even” before the profit consideration is made. This research provides an exemplary application of the break-even analysis to an actual construction company with one or more branches.