Tired Of Thin Margins on your construction projects? Add Profit To Your Bottom Line With These 10 Cost Saving Tips
Some projects appear to literally throw money away. Materials are wasted, broken, left to be damaged in the weather, or have to be carted to the landfill (at additional cost) because they were left over at the end of the project. Equipment lies around unused, other equipment is damaged, or the inappropriate equipment is used for tasks on the project.
It doesn’t seem hard to cut costs on a project by 2 or 3%? That seems to be a low number, is it even worth bothering? Consider this, if your project cut costs by 2 to 3 % it means that the profit will increase by a similar number. Again this sounds like a small number. But let’s consider that most construction projects are priced with a 10% profit margin (if we are really lucky it’s 20%, but in a tough market it could be 5% or less). So, if your project makes an additional 2% profit then the profit increases from 10% to 12%, which is actually a jump in profit of 20% – not too bad! In fact, most medium and large construction companies only make around 4 to 6% profit in a year – go on and check the results of the listed contractors. Therefore most companies would welcome a lift in profits of another 2%. Cost saving can get you those extra percentage points.
But does the construction team truly realize how easily they can dramatically influence the company’s profitability? Sure, there are many other things that can also positively and negatively impact profits, but everyone on the project has a direct influence on profits.
10 ways to reduce costs.
Let’s consider 10 ways we can reduce costs on our projects. In a follow-on article, we will consider other ways.
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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