General contractors who are getting in gear to take on a major project have to manage expenses meticulously. Failing to rein in costs can undercut profits substantially. Moreover, presenting multiple change orders or consistently submitting payment requisitions that are greater than what clients expected could compromise your relationships with them. Project managers should pursue savings opportunities and improve efficiency. Here are tactics that could help your business save money on your next big construction project.
Source Supplies Strategically
Where you decide to purchase building supplies could have a huge impact on the total cost of a scope of work. For the most part, it’s best to buy what you need from companies that are reputable, responsive, and well-stocked. Work on establishing relationships with the best building product suppliers that can facilitate affordable access to materials.
Try to time your big purchases well. Waiting too long to finalize an order could mean that you’ll have to wait too long to take receipt of them. That could set your timeline for completion back considerably. Extending the time that it takes to move on to a new phase of work could drive up costs and create serious logistical problems. By planning your purchases well in advance of the date that you’ll need materials, you can avoid unnecessary delays while keeping expenses down.
Staff Your Jobsite Smartly
Understaffing or overstaffing a project can be a major problem. Without enough hands on deck, you won’t be able to meet deadlines, and you definitely won’t meet clients’ expectations. Furthermore, trying to make due with less manpower than you really need could compromise jobsite safety. It could even undermine the quality of the work that your team performs.
Conversely, overstaffing a jobsite is a waste of your resources. If you’re staffing a phase of work with twice as many laborers as you need, you can expect that about half of a crew is going to be sitting around while the rest of the team is working.
First and foremost, calculate your labor needs with precision. Put some thought into how many workers you’ll need to maintain a particular rate of progress and what skills those workers need. Consider how your needs will shift as you move onto each step within a single phase of work rather than looking ahead to the next phase.
Secondly, don’t leave any room for dawdling on a jobsite. However, don’t automatically assign the blame to the dawdlers. Crew leaders and project managers should be directing workers on what they need to be doing. Whenever multiple team members don’t appear to be actively engaged in work, foremen and project managers must be accountable. Of course, if people have clear instructions about what they need to do and they just aren’t doing it in the hopes that their lack of effort will go unnoticed, continuing to employ them on your job site isn’t a good use of your funds.
Keep Financial Information Well-Organized
Project managers need a comprehensive command of their projects’ budget. Waiting too long to balance your books by reconciling your actual costs with your estimated costs is likely to lead to some extremely unpleasant surprises.
Tracking each expenditure down to the dollar and being consistent about carrying out basic accounting tasks can help you stop costs from spiraling out of control. Use a project management program that simplifies bookkeeping tasks and helps you stay on top of a project that has many different moving pieces affecting costs. Ideally, you’d like to use a program that allows you to intuitively update your records and pull up real-time financial reports that show you where you stand with expense management.
Now more than ever, contracting companies and companies have to be conscientious about overseeing project costs. With supply chain issues and rising energy costs, finding ways to make projects more affordable is crucial to the construction industry. Good financial management will help you increase profit margins, maintain positive relationships with clients, and grow your business.
