The construction industry is not a cheap one to work. High costs of hire and high costs of production. So it’s no wonder that one of the biggest risks to any company is a failure to be cost effective. It can come from all kinds of sources, so we’re going to try break down the best ways to be a lot smarter with finances in the construction industry.
Managing your clients
One of the first thoughts that will arise in any firm owner’s head when talking about money is the client. That’s where it all comes from, after all. In a lot of expert opinions, it’s not the biggest risk. But still worth considering. Good client relations are important to maintaining working partnerships. Particularly with those clients that will offer more projects down the line. Use things like the Raken app that can help you show the client professional reports they can fully understand. HD images, daily notes and work logs can make it a lot easier to keep them at ease and build their trust on a project.
The people for the job
Amongst the first costs that won’t immediately become clear to managers is the huge cost that employees can have. Not just employing them, that’s to be expected. But in a lot of cases, you will find that turnover is the biggest cost. If you don’t find the right people or retain them properly, you’ll be spending more money on hiring and training the next. So providing a good work environment, even at a cost, is more financially efficient in the end.
Be willing to outsource
Of course, you don’t have to hire for every job out there. Not every task that needs to be done for a construction firm has to be done in-house. It can often be a lot cheaper to have someone else do it. There are that natural causes of outsourcing, like customer service, website design and the like. Then there are some tasks that might require skills outside your team’s skillset. This is where network building comes in handy. Be open to bringing in temporary teams to help you with projects. A good professional relationship can be built in that way. At the same time, you’re not training people for specific tasks that you won’t need again any time soon.
Affording the equipment you need
Similarly, as specific as projects can be, you never know what kind of equipment you might need on the next one. Or how often you might need it afterwards. For a lot of projects, you might find it more economically sound to simply rent equipment for a short period of time. Otherwise, it could just collect dust and degrade as it goes unused. Otherwise, if you need to buy, you can make it a lot more affordable for yourself. For example, by sourcing concrete pump finance so you’re not digging too deep into your own pockets to get one.
Tracking your overheads
One of the skills you absolutely need to have as a permanent position on your team is the skill of allocating overheads. Most generic small business accounting software doesn’t work. Doesn’t have the capability of tracking all the overhead costs involved in construction. So you need to be able to do it yourself. Without being able to do it, perhaps with help of project costing software, you’ll be working in the dark. Most damning, you will be working without an idea of whether or not a project will actually be profitable for you.
Taking care of your equipment
It’s not all about where your money goes, either. It’s about finding out how you can keep more of it. For example, looking back at equipment. Inventory management systems don’t just help you track when tools or equipment go missing, helping you prevent loss. They can also be set to remind you of when maintenance is needed. Taking care of your tools won’t just save you money in regards to purchasing tools. They’ll also help you with the next point.
Lean principles have been one of the greatest revitalizers of manufacturing. Now, they have been lifted wholesale to apply in construction as well. It’s the art of eliminating as much lost effort, time and money as possible. Taking care of your equipment is a big part of this. But so is the very physical layout of your site. Keeping equipment organized so as little time is taken when travelling from one part of the job to another. Keeping track of resources like bricks and concrete through the closest suppliers and the like. Another big part of lean construction is safety. Making the workplace a lot more efficient and healthy for your employees. After all, missing labor that you need is a source of work interruption. Work interruption is another big source of money going down the drain.
Keep working at it
All of these solutions will work together to help you save a lot of money. But it’s not just a ‘implement them and you’re done’ scenario. It’s ongoing. Being cost effective is a process that has to continue alongside your business, not just improve it immediately. For that reason, it’s best to know how to measure them. To set key performance indicators. Not only will they help you measure the real value of changes you make to the business. It also helps you create a shared language with your team. It’s not always easy to share the direction you want to take in management, so KPIs can help translate that to very real terms with your staff.
We hope this article helps you get the most out of your business without breaking the bank. Undoubtedly, other challenges will present themselves. Just use the same kind of diligence in finding solutions and be able to adapt. So long as you’re able to understand all the costs, you should find yourself ever able to improve the cost effectiveness of your business. Tracking, measuring and improving is the key behind this whole approach to construction.