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Six Ways To Cut Costs And Save Your Building Clients Money

Cut costs and save your building clients money

Rapidly rising house prices and first-home buyers struggling to enter the market are fueling the conversation around housing affordability. Here are six things you may be able to do in your business to lower costs of a build. While each may only contribute a little, together they can add up to significant savings that can be passed onto clients, or used to improve your viability.

1. Create operational procedure manuals for as many tasks as possible.

For over a century the Parato principle also known as the 80/20 rule, from Italian economist Vilfredo Pareto’s observation that 80% of the land was owned by 20% of the population has been applied to almost every area of life. In construction, it suggests that 80% of one building project will be the same as another, and just 20% will be unique.

Check it out. If we were to observe you on two building projects, we would see you use the same routines for 80% of the work. Why not document these routines to make it easier for newbies to get up to speed? Your team could follow these standard procedures until someone finds an enhancement, which can then be incorporated to benefit all future job.

What is even more powerful is that you can hire lower skilled builders. Your procedures train them to do it your way – you don’t need to supervise as closely.

2. Develop a standard week of meetings

Record how often you and your staff are attending meetings, then ask, “what needs to happen to increase the time between meetings?”

It’s very easy for project managers to believe they are doing important work – simply because they are attending meetings: with foremen, subbies, architects, engineers and inspectors and of course clients. But do you/they need as many? Does your foreman need a daily visit?

I’ve seen builders save 8-10 hours a week by simply creating a weekly project management calendar, then gradually increasing the time between meetings. Start with missing a day then two. Aim for a weekly visit. Of course there will be exceptions, but it works around 80% of the time.

Builders default diary

3. Schedule workflow in detail

The first time I counted the number of subbies and suppliers in one residential building project there were more than 40. I couldn’t believe it! Not many industries deal with such a large supply chain, so it can be a huge burden for builders. How many in your current project?

To minimise the pressure and reduce delays, make sure that you (or your project manager) work through your next build project well before you start. Plan the workflow schedule in detail and highlight the critical items. Tally the man-hours budgeted for each section and create a simple table for your foreman to keep a running total of man-hours worked against man-hours budgeted. Then intervene immediately if it looks like time is getting away on the team.

4. Use a construction management program

There is no doubt that good software tools make a huge difference to construction management. Tools for the residential builder like Co-Construct, Builder Trend, Buildmaster etc. reduce supervisory visits, replace paperwork, keep track of communications, inform subbiues and suppliers of amendments to schedules, track variations and provide a secure place for recording meetings etc.

So, if you have more than one build on at any one time, investigate using such a tool. But note, these take time to master, so don’t give up too soon. Persevere!

5. Keep sub contractors right up to date with delays

Workflow is interrupted and time is lost when subcontractors are delayed. It can be most frustrating! So don’t let it happen in your business. Reduce the occurrence by keeping your subcontractors informed of your schedule.

Book them well in advance and request they confirm their availability. Then warn them as soon as you know there is going to be a change to your schedule. And ask them to do the same with you.

If you know early on that they cannot keep their original schedule you can intervene to protect your workflow. Common sense really.

Construction management is all about communication – make it a priority!

6. Request delivery commitment from suppliers

Like subcontractor delays, supplier holdups can greatly increase the cost of a build. E.g the joinery is delayed for several weeks because the importer’s fittings are locked up in shipping. So lining can’t start, your team has to secure the site (at additional cost) before heading to another job and the budget for scaffold hire will blow out.

But with a little discussion in the early stages (when gaining quotes and placing orders) you can negotiate a firm delivery date and request suppliers make a commitment to your schedule. Again the builders who have built good relationships with their suppliers (by paying on time etc.) are likely to get full cooperation on critical deliveries.

Summary

These are just simple things, but when all are functioning together they can improve efficiency and assist in keeping building costs down – making you more competitive.

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