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When I review annual cost surveys and other industry reports, I look at the entire report from top to bottom. The main numbers most people always discuss are sales, the gross profit margin and the profit before tax.

There may also be a column for the High Profit (HP) performers, representing the top 25% of the survey respondents for that particular year. The HP participants usually make a little more on gross profit percentage, but also have better expense control over all operating expenses that appear below the gross profit line. It is not unusual for them to have a significant difference in gross profit percentage, and maybe 1.50% less in operating expenses. For example, a company with $20 million in sales could have an overall difference in pre-tax profits of 2.5% or $500,000. That's a lot of money!

Drilling down a little deeper, we see the largest contributors to this result are the differences in the gross profit margin and in the payroll figure (includes taxes, insurance and fringe benefits). The balance of these differences relates to operating expenses. Following the old 80/20 principal, these three categories would be a good place to start if you also want to hit the HP pre-tax profit number.

Where to eke out additional profit
I suspect every profit center can add "something" to the gross profit line if forced to do so.

Could you get an additional 1.0% out of the sales function? This sounds easy, but we all know it's not. You would have to review your bid process, scheduling, equipment use, rental dollars spent and manpower use, and in general have better job control, including billing. However, you can find 1% - I'm sure of it. And once you find a way to achieve it, you need to communicate these thoughts to your foremen to get the right procedures implemented in the field.