How To Reduce Your Construction Company’s Operating Costs

The Office for National Statistics (ONS) estimates that the number of construction companies operating in the UK’s construction industry reached 325,736 in 2018. Operating a construction business is pretty expensive since various equipment, employee safety, and other sophisticated costs are involved. However, high operating costs can make it difficult to compete and undermine profitability. Therefore, it is prudent to find ways to lower your construction business’s operating costs to save money. Here are some of the best ways to reduce your construction company’s operating costs.

• Ensure estimates are correct before beginning a project

All construction companies estimate project costs before taking them on. Some of the most basic costs for construction include general office overhead, material, and labour expenses. You will also need to budget for expenses like construction supervision, equipment, and gas oil to power cranes, generators, bulldozers, and other equipment. Accuracy is non-negotiable when estimating these costs during the planning phase of your projects because any mistakes made will certainly come back to haunt you later on in the form of higher costs. You can use estimation software tools to lower the likelihood of errors in your estimates, so keep this in mind.

• Adopt lean construction practices

It is estimated that 57% of all construction project spending is wasted. This statistic is hardly shocking, given that the building sector has historically operated with a notion of more is more. However, projects have become more complex and challenging over time, with stricter regulations, timelines, and budgets. Additionally, many new materials, customisation requests, and complicated requests can add up to high expenses, inefficiencies, and waste. Thankfully, your construction company can adopt lean construction practices to remain competitive and profitable while lowering waste and maximising value. Lean construction principles allow your company to do more with less while guaranteeing high-quality outputs to clients. For instance, a major goal of lean construction is eliminating waste at every opportunity, from trimming down your inventory to ensuring that materials, equipment, and workers are moved to construction sites only when needed to avoid unnecessary transport expenses. This way, you can optimise your construction process and save significant cash.

• Streamline your business processes with innovation

Research by McKinsey & Company in 2018 revealed that today’s construction industry integrates more technological innovations at every stage of projects. This increase in technological innovation is a positive step in the right direction to address the productivity issues that have troubled the industry for years and the expensive operational costs that eat away at profits. Therefore, it would also be best to consider technological innovations to streamline your construction company’s processes for cost savings. You can use technology like LIDAR, satellite imagery, drones, and the Internet of Things to speed up your decision-making process, lower the likelihood of redoing designs, and boost your team’s overall productivity. Over time, quicker and more efficient decisions, less rework, and more productivity will lead to savings that will help your construction company reduce its operating costs.