Where margin leaks
Where project businesses lose margin after the job is won
Margin rarely goes in one big failure. It leaks at the handovers between quote, design, purchasing, warehouse, dispatch, install and invoice, where the same specification is carried by hand and something gets dropped.
Published by Curavest on . Drawn from our work inside UK businesses that quote, specify, buy in, deliver and install.
The short answer: a project business loses margin after the job is won through rework, return visits, supplier errors, changes absorbed instead of priced, and work delivered but never invoiced. Some call it margin fade. Below are the twelve places it usually escapes, what you notice at each, and the cheap fix that usually works first.
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01 Quote
Why do we lose margin on jobs we priced correctly?
Usually because the job you priced is not quite the job you build. Options and specials are described one way on the quote, another on the drawing and a third on the supplier’s paperwork, and nobody compares the quote with the final design.
- What you notice
- “We priced it, so why did it cost more?”
- The cheap fix that usually works first
- One specification record that travels from quote to purchase order.
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02 Order set-up
Why are there small errors on every order?
Because the same job is typed into several systems by hand. Header details can live in five or six places, and every retype is a chance to drop a size, a finish or a handing.
- What you notice
- A heavy admin load, and small errors everywhere.
- The cheap fix that usually works first
- Enter it once and stop the duplicate copies.
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03 Survey and design
Why do we keep remaking things on site?
Most remakes start before anything is made: no survey method, measurements taken before the fixed points exist, and client sign-off treated as if it were a check. These tend to be the costliest single incidents in the business.
- What you notice
- Remakes on site, often the most expensive problems you have.
- The cheap fix that usually works first
- A survey checklist, a hold point before release, and a second-person drawing check.
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04 Changes
Why does margin vanish on good jobs?
Client changes are absorbed instead of priced, and old drawings stay on site. Proving a change feels harder than giving it away, so it gets given away.
- What you notice
- Margin disappears on jobs that looked healthy.
- The cheap fix that usually works first
- A release point for each area, with every later change priced and re-drawn.
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05 Processing and purchasing
Is it really the supplier’s fault?
Often it started with our own order. Lines are missed or keyed wrong, parent and child lines disagree, and the specials that matter (handing, finish, edging, fitting packs) are carried in free text that the supplier has to interpret.
- What you notice
- “The supplier got it wrong.” Half the time it was our order.
- The cheap fix that usually works first
- Proper fields for the things that keep failing, and a mismatch check before the purchase order goes.
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06 Supplier
Why do the same supplier faults keep coming back?
Because nothing tells the supplier it matters. Errors are corrected by eye with no record, there is no written agreement on quality, and when the cost is claimed it is refused because there is no route to charge it back.
- What you notice
- Repeat faults, and claims that get refused.
- The cheap fix that usually works first
- A joint quality review, written codes for specials, a contra-charge route, and service agreements with the suppliers that matter most.
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07 Warehouse
Why do we only find faults at loading?
Goods are booked in when they arrive but checked weeks later, when the van is waiting. Meanwhile stock held “just in case” fills the space, with no usage, minimum or maximum levels to say what should be there.
- What you notice
- Faults found at loading, and a warehouse full of things nobody wants to throw away.
- The cheap fix that usually works first
- Check specials at goods-in against the drawing, clear the dead stock, and set levels for the few lines that drive most of the space.
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08 Dispatch
Why do we keep going back to site for missing items?
Because nobody shares one definition of “complete”, and the delivery note cannot be checked against the job. Some missing items were never on the order in the first place, so no dispatch check could have caught them.
- What you notice
- Return visits, sometimes several to the same job.
- The cheap fix that usually works first
- A one-page delivery note per room or phase, signed at loading and on site, plus the order check further up.
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09 Delivery
Why are delivery trips wasted?
Transport is booked before the supplier dates and the site’s readiness are confirmed. Goods arrive early, late, or at a site that cannot take them.
- What you notice
- Wasted trips, and goods refused on site.
- The cheap fix that usually works first
- A real “ready to run” gate before anything is booked.
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10 Install
What do our fitters’ on-site fixes cost us?
Nobody knows, because site fixes are not recorded. That is the hidden cost: time, materials and return visits that never reach the rework log.
- What you notice
- Nothing, which is the problem.
- The cheap fix that usually works first
- Log site fixes at source, in one app or one channel, with the time they took.
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11 Invoice
Why does cash lag the order book?
Applications for payment are built from memory rather than from what was actually delivered, and some delivered lines never get invoiced at all.
- What you notice
- Cash is tighter than the order book suggests.
- The cheap fix that usually works first
- Invoice from delivered data.
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12 Learning
Why do the same problems come back every month?
Because failures are recorded as costs, not studied. Reviews start, then lapse the first time someone gets busy or leaves.
- What you notice
- The same problems, month after month.
- The cheap fix that usually works first
- A few corrective actions on the biggest families of failure, each with a measure.
The pattern: one specification, carried by hand
Most leaks are not twelve unrelated problems. They are the same specification being carried by hand from one stage to the next, with a chance to drop something at every handover. A failure log can look like a dozen different issues until it is read this way. “Be more careful” does not fix it; one data path and a few deliberate checks do.
Why your rework number is bigger than your rework log
The failure log only sees what costs a delivery. Office catches and site fixes stay invisible, so a business underestimates exactly the expensive, upstream problems: survey, design and changes. Owners who think their rework number is small are usually counting only the visible part.
How much margin are we losing?
You can estimate it yourself with the cost of poor quality calculator, which shows its formula. Or bring a sample of your rework, remedial or credit-note records to a free review, and we will show you where the money is going.
Book a margin leak review Free. About an hour. You keep the findings.
Find out which of these is costing you most.
About an hour on a sample of your own records. You'll know where the money is going, and what to look at first.
Free. About an hour. You keep the findings.