Where You Should and Shouldn’t Cut Costs as A Construction Company

It seems inevitable that more than 80% of construction projects will exceed their budgets and project deadlines.

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Common mistakes can sometimes derail the most meticulous planning and it takes careful and thorough analysis to identify any problems, from simple human error to bad labour decisions and overpriced construction materials. In order to avoid any overruns, it is essential to get accurate estimates on the costing for both your direct costs and your indirect costs. 

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Making a Plan

Effective planning is the backbone of every construction project. In the early part of your planning, it is essential to identify and provide for possible risks that could impede the project, especially with regard to the project timeline and budget constraints.

Assigning and coordinating a timeline and cost to each identified risk in accordance with the construction project management guide will help with significantly reducing the number of unexpected and costly delays to the construction project.

Your current operations’ processes also need to be included in your planning, especially insofar as basic costs are concerned. Do not fall into the trap of underestimating costs, as this is a tricky path to ruining your bottom line profit. Above all, do not forget to plan for your site overhead costs for site administration, worker training and other sundry costs, as these usually comprise between 5% and 15% of the total cost of the project. 

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Other important factors to consider are delays caused by natural conditions, such as severe weather and other possible environmental events. It is advisable to provide insurance cover for such events so that you are able to recover costs incurred in the event of any damages caused by these events.

Spend Money to Save Money

If you do not already have bulk purchasing arrangements in place with your suppliers, it will be worth your while to enter into negotiations with one or more suppliers as soon as possible, especially for your raw material and basic construction supplies. Going online to do comparison pricing is another viable option for saving costs, as it provides a quick and method of identifying possible bulk suppliers for all your construction material needs. However, do not be distracted by ridiculously low prices and be very careful not to fall into the cheapest-price-is-everything trap, as this can often be linked to sub-quality products with a high potential for a future construction catastrophe. 

Schedule your quantities and volumes to be in line with your site requirements so that you have exactly what you need when you need it. It may be advisable to implement a just-in-time system with some of your materials to avoid any costly oversupply issues, as some suppliers may not have a returns policy. 

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Manage the Manager

Appointing the right site manager is perhaps one of the most important aspects of getting your project completed in time and on budget. Shoddy management has a direct impact on worker morale, with an increase in jobs done incorrectly and time lost to absenteeism. Site efficiency is negatively affected and this leads to an inevitable delay in the successful completion of the project. 

The ideal, competent site manager will have very good organisational and communication skills, with the ability to keep the workers motivated and focused on their objectives. Your site manager will also ensure that workers are regularly reminded of the project completion date and the expectations of their responsibilities towards the completion of the project. 

Doing it Right the First Time

Make sure that you have an experienced, multi-skilled and well-trained work team. Yes, mistakes happen, but your construction project has a deadline and wasting time on job repeats because your workers’ performance is not up to scratch is seriously counter-productive. It is essential to identify and address any worker performance issues as soon as possible to ensure the continued efficient flow of work on the construction site. 

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Tools of the Trade

Examine the possibility of renting equipment and tools that are infrequently used, especially heavy equipment like front end loaders and excavators, by comparing the cost of purchase against the cost of rentals. Your cost calculations should include the initial capital expenditure and well as interest on loans and the subsequent maintenance costs, measured against the total rental costs for a given period. Compare the rates and terms of several rental companies to be sure that you are getting the best possible deals.

Should you decide to purchase, make sure that you shop around before investing in quality tools and equipment that will provide long-term durability. It may not be wise to opt for the cheapest, just as it may not be necessary to purchase the most expensive. Whatever your decision, it is good practice to keep a register of all equipment on site and implement a tool sign-out policy. This will prevent unnecessary tool replacement costs and will help to prevent the unauthorised removal of costly tools from the site.

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Safety First

The site manager will also ensure that the safety setup on your site complies with national and local safety regulations to avoid any fines, penalties and possible site closures should a site safety audit find any problems. 

Should a site emergency occur, your workers need to be fully aware of the locations of first aid stations, fire extinguishers and all evacuation assembly points. The perfect solution to this is to install highly visible printed banner mesh around all these sites as well as at various locations throughout your construction site. In a panic, many people don’t think clearly and need to rely on memory. Printed banner mesh is durable and cost-effective, as it can be used multiple times on many different sites. When used as a site enclosure, printed banner mesh serves as an excellent means to inform the local community of the nature of your construction company and it can also be used as part of your site safety signage. 

Summary of Do’s and Don’ts 

Plan properly and add up all the costs. Do not take shortcuts with materials that are too cheap. Be wise and employ the right people for the right jobs. Do it properly the first time. Remember safety on site. Following these rules will help you go a long way towards completing your construction project on time and within budget.


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