6 Cost-Saving Tricks for Construction Companies in 2023
If you own or project manage a construction company, you already know just how costly construction projects can be. Research shows that a staggering 85% of all projects go over budget.
Costs were already at risk of overrunning budget — a problem that has only grown it’s become necessary to pay more for materials, equipment and employee salaries.
In 2023, construction companies need to employ smart tricks to keep project costs down. We’re here to help with six ideas to manage and mitigate your rising expenses.
Tip #1: Buy your materials in bulk
You’ve probably heard the saying before — fail to prepare, prepare to fail. Or in the context of construction, prepare to pay more. If you know before you’ve even started your construction project that you’re going to need a lot of a certain material, plan ahead.
Historically, companies were likely to get discounts by purchasing large amounts of materials in advance, securing up to 10% in cost savings. That’s significant when you consider that according to the BEIS Monthly Statistics of Building Materials and Components, year-over-year prices for all building work rose by 24.5% in March, with month-on-month prices continuing to rise by 5%.
But in the current landscape, there are additional benefits beyond just saving money. The industry is experiencing a materials shortage across the board.
That means with our current reality, it’s buy early, or risk not being able to buy at all.
By securing everything you’ll need in advance, your team will also begin your project feeling prepared and secure. After all, who wants to run out of key materials halfway through a construction project?
Tip #2: Focus on improving efficiency
Chances are, you’re employing a large team of experienced workers for your construction project.
The last thing you want to do is waste your professionals’ time on site, as this can seriously increase labor costs.
Prior to kick-off, devote time to figuring out the people, processes, equipment and materials you’ll need before you start work. It’s the best way to avoid delays and cost increases.
45% of construction workers report spending more time than expected on non-optimal activities. These activities include fixing mistakes, looking for project data, and managing conflict resolution, among others. All of these can be easily avoided with considered effort in the planning stage.
Tip #3: Take a considered approach to ordering
As we stated in tip #1, buying in bulk is a tried-and-true way to snag some very helpful discounts on your supplies. But on the flip side, implementing a just-in-time ordering practice is also worth considering in certain situations.
The just-in-time (JIT) approach involves keeping inventory low and only ordering materials after you’ve been contracted to do a job.
There are a few benefits here:
You’re not overspending on materials since you’ll only order as much as you’ll need for a project
You won’t have extra inventory sitting around in warehouses taking up valuable space
You won’t run the risk of supplies being damaged when they’re not actively needed for a job
But this method is risky, especially now. It leaves you no wiggle room when it comes to supply chain issues and cost fluctuations. We don’t recommend it for jobs operating on strict timelines, or when you are working with specific material requirements. It’s most effective when you have some flexibility to make substitutions for a material that might not be available when you need it.
In most cases — particularly with materials that you’re likely to use again and again — it’s best to order in bulk. But projects do come around that make sense with a JIT approach, so keep this tip in your back pocket.
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Tip #4: Save on your mobile workforce
As the world bounces back from the global pandemic, hotels, apartment complexes, and other corporations are now in a position to build new structures and revamp existing ones.
Demand for your services has come roaring back, with construction sites popping up all over the place. But when you’re contracted for a job that’s a considerable distance away from where your workers are located, you’ll need to factor in travel costs.
With gas prices also spiking, you may find the best deals housing your workers near the site, rather than covering the cost of a long daily commute.
Lodging isn’t necessarily cheap either, but you’ll often have a little more control over these costs — especially if you’re using the right tools to book.
For example, Hotel Engine is a free platform to use, and it offers exclusive discounts on hotel rooms that are only available for business travelers. It also saves a lot of time on the back end when it comes to managing your reservations and reconciling invoices.
Tip #5: Consider renting equipment
When it comes to ordering heavy equipment for your project, you don’t have to purchase everything.
Depending on how long you’re likely to use the equipment, and how much it costs to buy outright, you may cut down on costs by leasing your equipment. You’ll also avoid the hassle of storing your equipment, and the ongoing expense of maintaining it.
Most equipment can be rented for just the length of your construction project. This is particularly worth bearing in mind if you’re unlikely to need the equipment for any future projects.
Why budget to purchase equipment that you only need for a short amount of time when you can rent it for a fraction of the price? Plus, with inventories as limited as they are right now, you might find yourself on a long waiting list to purchase specific equipment.
Tip #6: Take good care of your employees
Workforce retention is important for any business, but with a serious labor shortage in the construction industry, it’s vital to hold on to talented employees to keep your project running smoothly.
This doesn’t just mean more money. It means listening to what they have to say, being flexible where possible with working hours and providing benefits that actually matter.
Ensure that you have an established learning and development system in your company that encourages your employees to advance their careers and helps them build their skills. When you invest in their development, your teams are more likely to be happy and motivated — and less likely to look elsewhere.
Limiting turnover will keep projects running efficiently, and will therefore make sure the overall costs are kept down.
Dependable savings on workforce lodging
Hotel Engine has extensive experience supporting construction companies with their workforce lodging needs. Our customers have successfully applied these six tips to help them keep expenditure as low as possible.
We know how stretched thin our customers are, and we work hard to negotiate the best possible rates on lodging.
Plus, with innovative technology features that we’ve built into our platform and our US-based, 24/7 Member Support team, we’ll save you time and hassle on booking and managing your hotel reservations.
All that makes cutting costs for your construction company significantly simpler.
See how much you can save with Hotel Engine by trying out our Savings Calculator today.
Cara Meglio is a Copywriter at Hotel Engine. She assists with content creation, researching and writing articles to help businesses improve their travel experience and discover helpful solutions with Hotel Engine. Cara has a passion for travel of all types. Based in Denver, CO, Cara loves exploring the Mountain West as well as international destinations.