Did you know that nine out of ten construction projects experience cost overrun? As a construction manager, you’re probably all too familiar with this reality. As a result, you’re looking for any edge you can get when it comes to finding cost savings.
You’ve no doubt turned over a lot of stones to find ways to increase your bottom line, or at least avoid dipping into the red. But it’s possible to look so hard for new savings ideas that you overlook some surprisingly simple actions that you can take to save money in a way that won’t force you to compromise on project quality.
Read on for six simple ways to boost your construction cost savings.
1. Participate in all stages of planning
OK, so you’re not an engineer. That doesn’t mean you shouldn’t be present for that stage of the construction planning process. Even if you don’t understand every technical detail, you have insights into what is doable and what isn’t.
Don’t forget: it’s your project.
Construction managers should be dialed in to every phase of planning for a project. Involvement is one of the most effective ways to save money, and one of the simplest. Poor planning is a sure way to invite cost overruns and delays.
2. Constantly monitor key data
One great thing about being a construction manager today compared to, say, the 1990s, is the available data. With gads of technology at your disposal, you can closely track just about every metric that matters to a construction site, including materials, productivity, equipment usage, and individual worker stats.
By closely watching your data metrics, you can identify areas that are a major drain on your finances. Let’s say the data shows that workers are often just standing waiting for a backhoe to arrive to begin work. This means that you’re paying a lot for man hours that aren’t actually being used to get work done.
Where do you begin fixing such problems? Evaluate your software; there are a lot of asset tracking software options out there, as well as time tracking software. I also recommend perusing the construction management software options in Capterra’s directory to see what tracking features they offer.
While it may seem counterintuitive to shell out money on construction management software to save money, that’s exactly what software can help you do. Good software can help you become more organized, which keeps you on schedule and on budget.
3. Consider prefabricated and modular structures
It’s not a solution for every construction site, but if your project involves a fairly simple structure you can often purchase a modular or prefabricated building for a fraction of the cost of purchasing all the materials and doing the work yourself.
(Modular building via Modulek)
The savings can be immense. Prefabricated construction can cut the delivery time of a project by a third and/or only require you to hire a few laborers for what would normally be a huge job.
The concept is applicable not just for structures, but also pre-wired light fixtures and exterior walls. If you’ve done it a hundred times before, someone’s probably figured out a way to prefabricate it.
4. Figure out how much you’re worth
When should you hire a contractor, and when should you do the job yourself? It’s a tricky question, and you can easily overspend on both sides. Finding the right balance comes down to determining just how much your time is worth.
Calculate the number of hours you work on a project in a given week, as well as how much revenue your work brings in each week. Divide that by hours worked, and you have a general idea of how much your time is worth per hour. If it’s $50 per hour, you’re better off hiring a contractor for $400 to do a job that would take you a couple days to finish.
5. Buy your own materials
If you do hire a contractor, don’t let them buy the parts—if you purchase the parts yourself, you’ll often find less expensive options than what your contractor will offer. Some contractors may grumble, but chances are they’d rather have the work than not.
It can also save you money because if you ever have a dispute with a contractor and they walk off the project or don’t show up, you might never see the project materials again. The materials might legally be yours, but you’ll experience a big headache (and possibly incur legal costs) trying to get them back.
Overseeing what materials are purchased allows you to keep costs under control, and you can make changes in one area if another part of the project goes over budget.
This isn’t always the right move: after all, contractors may know best which materials are best suited for the project. But if you’re experienced with the project and know the materials as well as contractors do, take the lead on making the materials decision.
6. Resist the urge to settle on the first contractor you meet
You’re busy, I know, but don’t let that bleed into the contractor decisions you make. Don’t settle for good enough, or fail to interview several candidates.
Research contractors before or after meeting face-to-face. Verify their experience and credentials, and consider using these factors as leverage in negotiations. If a contractor has less experience than others, you can push for a lower price.
Be sure to get a few estimates before deciding. Even if you like the first contractor you meet with, they may lower their price if they know you’re evaluating other bids. Aim for three comparable bids or estimates per project.
Tell us something you did that saved you a lot of money
We all learn through trial and error. Over the course of your career as a construction manager, you’ve likely ended up saving you money in a way you didn’t expect. Let us know about that experience, or share your other cost savings tips in the comments below.
Looking for Construction Management software? Check out Capterra's list of the best Construction Management software solutions.