5 Cost-Saving Tips for Construction Business Owners
How You Can Save Your Construction Business Money
1. Make Use of Remote Site Plan Services
It might be tempting to pay a surveyor, but you should avoid this if possible. Often, you can get permits for small to mid-sized projects using a site plan created with satellite imagery and other publicly available data. These plans typically cost between $90 and $150, so you could save significant money by not hiring a surveyor or engineer. As an added benefit, you won’t have to schedule an on-site visit, giving you more time and resources to direct your attention to other parts of the project.
Before you start a project, check if the permit application requires a site plan stamped by a surveyor, engineer, or architect. If not, reach out to a remote site plan service.
2. Consider Construction Apps
Site plans aren’t the only opportunity for construction business owners to transition to the digital age. There’s an app for everything these days – including productivity apps for construction business owners. In fact, you may be surprised by how this can put you ahead of the competition. According to a 2013 study from the McKinsey Global Institute, less than one percent of the construction industry’s revenues were spent on software. Yet 98 percent of construction projects have cost overruns of more than 30 percent!
To utilize digital technologies, we suggest using a software solution to keep track of your expenses, the time that each employee or subcontractor works, and other data that can help you assess how your money is spent on each project. Having an app can make it easy to review your budget, without having to spend time crunching the numbers yourself.
In addition, it’s important to periodically review the data from your app. If you start using software but don’t consistently utilize it, this will waste your business’s money. At the end of each project, take some time to carefully review the data you’ve collected. When you have all your expenses and contracts in front of you, you can figure out exactly where you may be able to cut back for your next project.
3. Choose the Right Subcontractors
It can be tempting to hire the first subcontractor you meet with in the interest of hurrying the hiring process, but this will be a detriment to your project. Instead, take time to interview multiple candidates, and select the person who is the best communicator, able to follow instructions, and knows how to manage a team. If you rush the hiring process and end up with an unreliable subcontractor, it could put the success of your project at risk.
4. Set Boundaries and Expectations
Don’t let your team members cost you any more money than they are worth. When you put a subcontractor in charge of a team, communicate your expectations for those team members.
To start, ask yourself how you expect your team to handle company property on- and off-site? Are you paying them for breaks, and how long should they be? When these expectations are set and followed, you can avoid missed deadlines or critical mistakes due to team members abusing their privileges.
In addition, you should check in with your team and prevent backtracking. The quicker that work is completed, the less time you’ll have to pay for at the end of the project. Your employees should also respond quickly to email and text messages (or use a construction app), so you can receive updates in real-time about each project.
5. Don’t Let Your Subcontractors Buy Parts and Materials
Buying in bulk can save your business significant money and time that you’d spend making multiple orders. If your company is working on numerous project that require similar parts, place a bulk order instead of having your subcontractors handle it. They’ll charge you for materials and the time it takes for them to buy and deliver those materials. Although it might be tempting to delegate this task to them, this could quickly deplete your budget.
If you’d like to receive an outside input, you may be able to ask your subcontractor for advice on the amount and type of materials required for the project. Still, you should be the one taking the time to place the order and pick up the materials, so that you don’t have to pay someone else to do it for you. In the end, the investment of your time and oversight will end up saving you money and preventing surprise costs.
Cutting costs is an effective way to boost your construction business’s bottom line, but you shouldn’t sacrifice the quality of your services in the process. Once you implement the five tips in this post, you should be able to accomplish long-term cost-savings while also improving your construction services. Good luck!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.