In the construction industry, there are a vast amount of resources that go into a project to produce a relatively low profit margin. Because of this, construction companies place a high importance on saving money so they can survive and keep building.
Check out our list of the seven best ways to cut costs and save money in construction.
1. Shop around for the best prices on materials and equipment
Researching the best prices on the materials you buy often is a simple yet effective way to increase profits in construction. Many companies have been using the same material or equipment supplier for years and even though you might feel loyal to them, that doesn’t always mean they have the best prices out there. It never hurts to check market prices occasionally to see the best deals in comparison to what you’re paying.
2. Join a group purchasing organization
Another cost-saving idea for construction companies is to use a group purchasing organization. Joining this network made up of builders, suppliers and manufacturers across the country saves you money because you can leverage lower costs for your materials. For example, being part of a home builder group purchasing organization like CBUSA gives you the combined purchasing power of a top 10 national builder.
3. Invest in quality tools
Contractors and construction business owners should buy high-quality tools rather than only considering the purchase price and getting cheap substitutes that will most likely need replaced frequently. Always take into account the long-term cost of your tools (including how much it costs to operate or repair) and evaluate the impact it has on your business. You can also reduce construction costs by using your current equipment to its max function to deliver more with less. For example, if your equipment can take care of two functions instead of one, use it for both instead of buying separate pieces.
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4. Create an inventory of all tools and equipment
Having employees sign tools in and out will help you to know where they are at any given moment and stop them from going missing. Also, train all employees how to properly take care of the tools to ensure that they last as long as possible. You could even go as far as keeping records for each piece of equipment that log when any maintenance has been done on that specific tool. And if you provide your employees with a phone, iPad or computer, institute a policy of responsibility for any electronics in case they get damaged.
5. Measure and make cuts to reduce waste
Reducing waste will not only be good for the environment, but it also helps you save money in your construction business on excess materials that could end up in a landfill. Implementing sustainable practices can also help cut down construction costs and increase efficiency. Many post-construction materials can be reused and recycled, so make sure to research what can can be saved and reused and put someone in charge of managing this.
The Environmental Protection Agency says that construction materials like doors, hardware, appliances, fixtures and wood scraps can be salvaged and reused by home builders and commercial contractors. A couple more recycling ideas: Brick and concrete can be recycled on site as driveway bedding, and paint can be remixed and used in storage areas.
6. Take care of your employees
It’s no surprise that you’ll have a more successful construction business if you keep your workers happy, but it’s even more important to follow during the current labor shortages in the trades. By listening to any issues they might be having, being understanding if they have any conflicts with scheduling, etc., you’ll ensure that your workers continue to do their best work for you. Also, try avoiding any overtime since it not only costs more but decreases motivation and productivity. Be sure to carefully schedule projects and build in extra time if necessary to complete a job.
7. Invest in construction management software and technology
For many contractors and home builders, using construction software is where the biggest savings come in. Of course, you have to invest in the time and effort it takes to get it all set up and running. Although it may be hard to see an “investment” as a way of cost-cutting, your company will save money in the long run.
Investing in a construction app like Buildertrend can make every project even smoother and more successful. And that’s not all. Our all-in-one platform has the tools you need to set a budget, communicate with clients, schedule work and keep tabs on job site progress. If you’d like to see how Buildertrend can change the way you do business, schedule a demo today.