ProFinance Blog

Cutting Costs As A Construction Company

The amazing thing about the construction industry is, well, there is never a shortage of projects to dig your trowel into. Sure, there are good times and bad – periods where you go from building entire developments to adding on extensions – but it is pretty good going most of the time, especially with the millennial generation opting to invest in houses over stocks and shares.

However, that doesn’t mean this sector is entirely bulletproof. There are failures. Lots of them. And the biggest culprit of them all is wastage and over expenditure. They’re the two big business killers out there.

The problem is: implementing the kind of measures that will save time and money and streamline workflows is a lot harder than just wanting to. You know you need a budget and you know you need to stick to the budget, but knowing how can often be a mystery.

construction industry

So, to help you out, we have pulled together a list of ways you can keep your spending in check, and start completing projects big and small both on time and under budget. Yeah, the fabled unicorn is finally attainable, and here’s how: 

1. Accurate Estimates Are A Must

From the very moment, a new project starts to be discussed, you need to start working on your estimates and do all you can to make them as accurate as possible. We know digging your foundations may seem a long way off, but the pre-build phase is where you need to be super-clinical because this is when you will be giving your quote and signing on the dotted line. Our advice: invest in reputable, respected and high-quality estimation software. By doing this, you will not only have the upper hand in the bid process and in your bottom-line management. To get the most accurate estimations of all, make sure you get software that fits your business model and needs; tailor it to your niche. Not only will this save you money, it will save you time and hassle too.

2. Risk Assess Early Doors

Another absolutely crucial habit to get into is highlighting potential risks or uncertainties early on, preferably before a project has kicked off. The reason for this is simple: it will save you a healthy dollop of time later on and, as we all know, time is a huge part of both your budget and your reputation. That said, it’s not just about highlighting any potential risks; it is also a matter of translating that into cost-implications. Of course, there is a difference between a risk and an uncertainty, with the former being a lot easier to both understand, highlight, identify and mitigate. Nonetheless, both can prove costly if you don’t do something about them early on.

3. High Employee Turnover

This is one of the big killers of so many businesses in so many industries, but none more so than the construction industry. This is because of a plethora of factors, from a shortage of tradesmen to competitors approaching top talent with attractive offers. Not only is this frustrating, though, it is seriously costly too. There is the matter of being understaffed, having to find new talent and the risks to your project not coming in on time anymore, which in itself has a lot of knock-on effects. That’s why you need to make sure your employees are happy. Of course, that doesn’t just mean paying them the wage they deserve, or the wage that is industry standard. You need to go above and beyond. You need to prove you value them by investing in the development, something that can be done cost-effectively at http://americansafetycouncil.com/content/osha-30. You need to make sure that you adhere to strict safety standards, and that your supervisors make a point of this. You should offer a bonus-share scheme should any project come in under budget and on time. You need to make sure they have all the tools and equipment needed to do their jobs as effectively as possible. And, above all, you need to make sure you lead your employees; you need to make sure you trust them to their job without your micromanaging their every move. Tradespeople are proud of their skills, it’s their identity, so don’t threaten this in any way.

4. Communication Needs To Be Open

The more transparent you can be the more money you can save. We’re talking about being open with your employees, with your suppliers and with your clients too. The reason for this is, well, no one is going to refuse repeat business. Even if it means negotiating on price and deadlines and whatnot, people will happily make that deal just to be used on future projects, so get into the habit of negotiating and helping the other party involved see the bigger picture. Of course, this is nothing new. Negotiating has been used since the beginning of time, and that’s because it is one of the most effective ways of reducing a company’s overheads. But that isn’t all. By having open lines of chitchat, you will develop a relationship of mutual trust and respect, one where quality and understanding will get better and better over time, and that in itself will help boost your bottom line.

5. You’re Wasting Your Money

Every construction project produces waste. We know that. You know that. Everyone knows that. And running a ship where there is zero waste would be almost impossible. That said, there are a handful of ways in which you can drastically reduce the amount of waste you are left with and that will drastically reduce the amount of money you chuck away on each project. Anyway, the first place you need to look at is where this waste is happening. You need to look at what materials tend to be the biggest culprit, whether that be plasterboard, timber, nails and screws, bricks or anything. By knowing where the big problem is, you can then look at your process for ordering materials and find out how to be more accurate with your estimated needs.

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