Times are tough for business owners — construction companies are no exception. Every dollar matters when planning projects, so finding ways to save money is essential for construction management. While you may see losses, you can mitigate them by reducing costs in another, such as implementing construction equipment maintenance. Here’s a guide explaining how to compensate for lost expenses and boost profitability.
Why Mitigate Lost Expenses on Construction Sites?
Efficiency is vital in the business world, so construction managers are under more pressure to lower costs and improve profitability. However, there’s a fine line between reducing spending for your project and compromising the quality. Project managers should lower the job’s financial liability while delivering quality buildings for their clients.
With that in mind, you should recognize the benefits of lowering prices on the construction site. These three reasons demonstrate why expense mitigation leads to better outcomes for construction companies:
- Competition: Your construction business likely has to compete with others in the area. Finishing under budget and ensuring cost efficiency will make you stand out. Mitigating spending means you can lower your prices and earn more contracts.
- Shareholders: If you have investors, they’ll want maximum profitability. You can maintain a solid relationship with your shareholders if you consistently find cost-reducing measures and make intelligent business decisions.
- Sustainability: Spending reduction and sustainability go hand in hand, especially in the long term. The International Energy Agency says buildings account for 30% of the world’s energy consumption, so finding ways to mitigate losses and increase energy efficiency creates a win-win situation for your business.
How to Mitigate Lost Expenses on the Construction Site
Losses can come from numerous sources on the construction site, so it’s essential to mitigate them with cost-reducing measures elsewhere. Here are four ways to offset expenses and save money on every project.
1. Leverage Technology
Cost reduction should start before any shovels hit the dirt. The planning and design process is crucial for laying the groundwork and setting the tone for your project. Technology has evolved with helpful software and tools for saving money, and these two resources benefit you significantly.
Construction Management Software
The first program to take advantage of is construction management software. This tool lets you manage not only projects but also your clients. Construction management software enables project managers to automate administrative tasks, such as scheduling and organizing documents. It also streamlines communication and saves time by letting all involved parties sign contracts without worrying about paperwork getting lost in emails.
Construction management software is also beneficial for tracking your financial records. It updates you on the project’s financial status and determines whether you’re on track with the budget. You can also test how certain factors affect your finances, such as construction equipment maintenance or hiring another subcontractor.
Building Information Modeling
Building information modeling (BIM) gives you a more intimate understanding of your building before you complete your blueprint. Modern BIM software visualizes a project, and lets you know where errors are and what you can do to fix them. Knowing this information in the design process is crucial because you can prevent waste before it happens. Reworking a section can be detrimental to your budget and schedule.
BIM has demonstrated its effectiveness in numerous projects, increasing its popularity worldwide. A 2019 Journal of Building and Engineering article says BIM adoption has grown worldwide to balance quality, price and time restraints. BIM may have some barriers — such as cost — but it’s a net positive for your projects.
Additionally, a 2020 study in Ain Shams Engineering Journal says BIM benefits construction sites by improving productivity, enhancing communication and tracking progress during the project. Altogether, BIM improved respect among all parties involved and increased efficiency, making it a solid cost-saving measure.
2. Limit Waste
Another key benefit of BIM is limiting waste on the construction site. Waste can be a significant issue in construction, with some jobs leaving behind metal, wood, bricks and plastic. Cleaning up can be an expensive venture, especially if you pay another crew to do the job. Waste is also detrimental to the environment, as seen in the European Union (EU). The EU says construction waste constitutes a third of all its waste, harming habitats and contributing to toxic gases.
The best way to mitigate construction waste is to use advanced technology like BIM. This software gives you accurate estimates of how much of each material you’ll need, reducing the risk of overbuying your supplies. If you still have leftover materials, consider reusing them for future projects, taking them to a recycling facility or donating them. Reusing the materials is an excellent way to mitigate losses because another project will find them helpful.
3. Prioritize Construction Equipment Maintenance
The equipment you use can get expensive, so it’s worth your time and effort to invest in quality devices and maintenance. High-quality construction vehicles and machines may be expensive in the immediate future, but you’ll save money with less maintenance and fewer headaches over time. Regardless of your choice, implement a maintenance schedule for all machines.
Construction equipment maintenance is essential for the health of your machines and OSHA guidelines. For example, suppose your company owns a fleet of forklifts. OSHA requires daily inspection for all your forklifts before using them, including a two-part examination with the engine on and off. Your forklift inspection checklist may include the following items:
- Tightening the lug nuts
- Inflating the tires
- Examining the lights and other safety features
- Testing the steering wheel
- Driving to ensure a smooth ride
4. Invest in Your Workers
Employee turnover has become a more significant issue for construction companies in recent years. The industry has suffered from shortages, forcing businesses and firms to scour for talent wherever possible. Losing employees is ultimately a loss for your business because of the cost it takes to rehire. Indeed data shows hiring new workers can cost between $4,000 and $20,000, not accounting for their salary and benefits.
The tight labor market means it’s more important than ever to invest in your employees. Professional development is a significant desire for many workers, so upskill and retrain them as necessary on the job or reimburse them for outside classes. Research shows only 29% of employees are satisfied with their current opportunities for professional growth, so use this development to keep workers in-house and mitigate hiring spending.
Construction Equipment Maintenance and Other Cost-Saving Measures
Efficiency is in high demand for construction companies nowadays. Your crew must finish on time and under budget to ensure all parties are satisfied with the project. The site may see some losses, but there are mitigation tactics you can employ to offset the expenses. These four tactics enhance your business’ competitiveness and viability in your targeted markets.