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.