The construction industry is inarguably a crucial one for the UK, being essential for the nations’ infrastructural progress and also providing a not-inconsiderable amount of jobs across the country – over two million, to be more precise. It goes without saying that this is a lucrative industry in which to build or sustain an enterprise, particularly with the new Labour government’s commitment to investment in infrastructure from transport to housing; this, however, doesn’t mean that construction is a safe industry by any means.
Indeed, this is an industry plagued with difficulty, whether from continually-strained international trade in raw materials or national cashflow difficulties following on from the cost-of-living crisis. Profit margins are notoriously slim on most projects at the best of times, let alone in the aftermath of such industry uncertainty – which is why paying close attention to your own construction business’ overall profitability is crucial, whether you’re well entrenched in the industry or just starting out. How, then, can you optimise costs with respect to your business and its longevity?
Efficient Material Management: Reducing Waste and Maximising Resources
Managing the profitability of a given project is a multifarious project of all its own, but one which invariably starts with your approach to managing materials. This is, in principle, a simple task, given the precision with which buildings are designed and projects planned. However, shifting designs, whether in response to last-minute planning snafus or new land survey information, can result in redundant material purchasing. This is why iron-clad contracts with contingencies for design shifts are key.
On a more general level, it’s important to maintain some active control over relationships with suppliers, where changes to wholesale costs can make a dramatic difference with respect to future project costs. Building aggregate, for example, is a common material required in large quantities for temporary roads and building foundations, and as such something worth seeking out the best price for. Doing this can also ensure you build a positive relationship with a supplier, guaranteeing favourable prices on different materials going forward.
Labour Productivity and Workforce Efficiency
Your next concern is an ongoing cost, and one which needs considering between projects as well as during them: labour. Freelancers and salaried employees alike make up a considerable portion of your business’ operating costs, and can be a drain on profits if not properly managed.
For one, employee efficiency during projects is key to keeping them on-schedule and reducing extensive overtime costs; for another, ineffective employees are more likely to make mistakes, and cause additional costs elsewhere. Regular worker training on the ground floor will help in one regard, while proper logistical administration on the upper floors will ensure energy is efficiently spent from project to project.
Leveraging Technology for Smarter Project Management
It’s difficult to talk about industrial cost-management without acknowledging the unfortunate and ongoing costs associated with maintaining operational relevancy. New technologies make construction processes quicker and more efficient, and hence make certain businesses more competitive than others. They can also significantly reduce costs in the long term – the objective you’re trying to achieve – but at the (literal) expense of short-term expenditure. This is a matter for careful cashflow management, and well worth exploring besides.