Every successful construction project depends on a good eye for controlling costs. With material costs and prices, labor costs, and overhead expenses rising and falling over time, contractors and project managers must use strategic cost-saving measures to maintain profitability and deliver projects on time and within budget.
In this article, we'll explore eight proven strategies and show you how to reduce construction costs without compromising quality or safety.
Strategic sourcing is a methodical approach to finding reliable suppliers and buying construction materials. Key strategic sourcing components include:
Saving money begins with making informed decisions about where and how to allocate funds. With a limited budget, it's worth spending time to ensure you spend where you need to and save where you can.
There are hundreds of ways to save anywhere from a few dollars to several thousand. Here are some intelligent spending strategies to consider:
Purchasing finished lots can be a cost-effective strategy to cut costs and reduce construction cost. Unlike raw land, finished lots come with the infrastructure already in place, such as roads, utilities, and permits. Although the upfront costs of finished lots may be higher, they are offset by a reduced need for investment in site preparation and development.
Building materials account for a significant proportion of total project costs. Any reduction in materials cost can help you to keep project profits within the normal range of about 10%. However, it's important to prioritize quality while still seeking out cost-effective options. A reputable local supplier like LS Building Products can help ensure access to all the materials you need at competitive prices.
Ordering materials in larger quantities helps contractors secure favorable per-unit prices and minimize transportation costs. Additionally, sourcing wholesale building materials locally whenever possible can help reduce shipping expenses and storage costs and support the local economy.
Labor costs can consume 40% of a construction project's budget. Skilled labor is essential to the construction industry, but without careful management, labor costs can quickly run out of control, eating into construction company' profit margins. Let's look at a few tips for minimizing labor costs.
Effective project management is essential for minimizing waste and controlling general overhead costs. By streamlining processes, improving communication, and leveraging technology, contractors can reduce waste, track project progress, minimize delays, and keep overhead expenses at the national average of around 6% of the total project cost.
Securing favorable financing terms is essential to save money and reduce construction cost. Therefore, shop around for the best interest rates and learn how to negotiate flexible repayment terms. Build relationships with lenders, who are often happy to offer attractive rates to contractors with a full project team and proven track record.
Paying bills on time, managing debt responsibly, and keeping accurate financial records can help contractors qualify for lower interest rates and more favorable loan terms.
Optimize the design and construction process to achieve the best possible balance between cost, quality, and functionality. Contractors who analyze each aspect of the project and identify opportunities for improvement can reduce costs without sacrificing performance.
When it comes to interior finishes, contractors can use several strategies to minimize waste and reduce costs without compromising on aesthetics or functionality.
Change orders are among the most common causes of cost overruns. To minimize the risk of change orders, invest time and effort in thorough planning and communication throughout the project. Help your clients define their needs and expectations early to reduce the chance of surprise project scope changes. Conduct detailed site assessments and feasibility studies to identify potential challenges early on.
LS Building Products is committed to helping contractors and construction companies find cost savings without compromising quality in their construction projects. We stock a range of high-quality materials at competitive prices to help you save money, including:
To learn more about how we can help you control and even reduce construction costs, talk to a building supplies expert or drop into our stores in East Peoria, Champagne, Pontiac, or Springfield.