From Busy to Profitable: How to Prove You’ve Got Capacity

Introduction - Prove You’ve Got Capacity

Saying “yes” is easy. Delivering profitably is hard. Construction and engineering SMEs don’t usually fail for lack of demand, they stumble when they take on work without the capacity to deliver: people, cash, equipment, suppliers, and control.

At Jones Financial Accounts (JFA), we help owners answer a simple question before they sign a contract: Do we genuinely have the capacity for this job, without hurting margin, cash flow, safety, or reputation? 

In this guide, I’ll show you a CFO-level way to test capacity in minutes, then build a system that scales.

What you need to review

1) Cash capacity (highest impact). 

Can you fund labour, materials, plant and prelims before money lands? Map the cash curve: deposit → valuation → approval → payment. Add retentions, typical variation delays, and real debtor days. If the cash dip exceeds your headroom, you don’t have capacity, no matter what the diary says. (Use our free Cash-Flow Forecast Template)

Projects that “fit” operationally but trap £150k–£300k of working capital can force overdrafts, slow supplier payments, and trigger price rises or stops, killing margin on multiple jobs, not just one.

2) People capacity (skills, supervision, safety). 

Do you have the supervisors, engineers, and subcontract teams to deliver without overtime firefighting? Check holidays, training, and sickness buffers; confirm critical tickets and permits are in date. Capacity isn’t headcount, it’s deployable, competent crews.

3) Plant/equipment and logistics. 

Is the kit available when the programme says it is? Consider maintenance windows, transport, off-hire timings, and clashes with other jobs. A missing MEWP for two days can wipe a week’s margin.

4) Supply chain resilience. 

Lead times, MOQ, price volatility, and credit limits with key suppliers. If accepting the job pushes you onto pro-forma or reduces your line elsewhere, your real capacity shrinks.

5) Management bandwidth. 

Estimating, QS, and PM time are finite. If senior staff are saturated, quality slips, variations are under-documented, and margin leaks. Add admin capacity for RAMS, permits, and O&M, those hours are real.

6) Systems & visibility. 

If you can’t see job-level costs weekly, you’re driving at night with no headlights. Capacity relies on management accounts, WIP, and KPIs that flag drift early. See related guidance on the blog: Management Reporting & KPIs.

7) Strategic fit (long-term impact). Does this job move you toward your target sector, geography, and contract type? If not, it consumes scarce capacity that could be used for higher-fit, higher-lifetime-value work.

Quick test: if two or more of the seven fail, capacity is no, or price/sequence the job so those constraints are removed.

Why it matters for businesses

A £2.4m M&E contractor models cash for a £600k school project. The forecast shows a £180k dip in week 7 due to long-lead materials and a 35-day certification lag.

They renegotiate terms (40% material upfront, fortnightly valuations) and phase labour to match deliveries.

Outcome: no overdraft breach, supplier terms maintained, and a clean 19% gross margin. Stakeholders win, directors sleep, site works smoothly, suppliers get paid on time, and the client gets quality.

Done wrong

A civils SME accepts a £900k highways job while already running two large sites. Supervisors stretch, overtime spikes, and paperwork lags.

Variations aren’t evidenced, the principal contractor disputes £70k, and retentions slip. Cash tightens, a supplier moves them to COD, delaying another project.

The final margin falls from a tendered 18% to 7%, and reputation takes a hit with two clients. Stakeholders lose, teams burn out, safety near-misses rise, and directors become reactive.

Commercial upside of getting it right

predictable cash, better buying power, fewer crisis hires, stronger QS files (so you get paid what you’ve earned), and a brand known for on-time, on-spec delivery. For more on smart decision filters, see: Should You Take That Opportunity?.

Strategy to get it right

Board / Leadership

• Define a Capacity Gate. One page with hard rules: minimum margin, max cash dip, max crew utilisation %, required kit availability, and supplier green-light. If two amber or one red → renegotiate or walk away.

• Approve with numbers. Insist on a 13-week cash overlay including this project. (Use our free Cash-Flow Forecast Template)

  
  

Commercial & Estimating

• Price in reality. Include realistic prelims, programme risk, and admin time for variations/permits. Use a True Cost Calculator (see Resources) so overhead recovery and labour productivity are honest.

• Cash-first terms. Seek deposits for long-lead items, milestone billing that precedes cost spikes, and shorter certification cycles.

  
  

Operations & Site

• Resource calendar. Lock supervisors and critical trades before acceptance. Protect your A-team for strategic clients.

• Standard methods. Reuse RAMS, checklists, and QA packs to cut prelims and rework. Weekly look-aheads must match logistics and supplier promises.

  
  

Finance

• Job-level MI. Weekly cost reports, monthly WIP, and margin bridges (tender → latest).

• Collections & terms. Escalation cadence for certificates and aged debt; don’t fund a client’s project with your payroll.

• Scenario runs. Best/base/worst on programme, price and labour, only proceed if worst still protects cash and covenant headroom.

  
  

People & Safety

• Competency matrix. Match tickets/experience to programme phases; schedule training early.

• Fatigue control. Cap overtime; tired teams make expensive mistakes that wipe margin.

Download helpful template: Job Profitability Tracker on Resources.

Common mistakes

1. Overtrading, growing revenue faster than cash.

   Punishment: overdraft breaches, supplier stops, missed VAT/CIS deadlines, and potential penalties.

   
   

2. Assuming you can “find the labour.”

   Punishment: agency premiums, overtime burn, safety near-misses, warranty call-backs.

   
   

3. Ignoring management bandwidth.

   Punishment: poor documentation → rejected variations; reputation damage as comms slip.

   
   

4. No post-project review.

   Punishment: you repeat margin leaks; lessons never convert into methods.

   
   

5. Unclear MI.

   Punishment: discovering margin erosion at final account rather than month two. Fix by implementing disciplined Management Reporting.

   
   

Why professional support pays off

JFA installs the guardrails that keep you safe at scale. Using our Growth Finance Framework (Foundations → Visibility → Control → Strategy → Partnership), we:

• Build your Capacity Gate and decision filters.

• Set up job-level MI, WIP, and KPIs so slippage is seen early.

• Model cash curves and negotiate cash-first terms that protect working capital.

• Train estimators, PMs and QSs to price in risk and document for payment certainty.

  
  

  The result: you accept the right projects, deliver them cleanly, and grow margins with less stress. Start now with the free tools on Resources.

  
  

Key takeaways

• Capacity is more than time, it’s cash, people, kit, suppliers, and control.

• Use a one-page Capacity Gate before saying “yes.”

• Model cash dips and protect headroom with cash-first terms.

• Job-level MI turns surprises into manageable course corrections.

  
  

Wrapping up today's insights, tomorrow we simplify another accounting challenge