How to Cut Construction Costs and Increase Profits Part 2

Despite promising upturns in the housing market, astute builders must find ways to work efficiently if they are to remain competitive. There are many ways in which you can work smarter rather than harder. We get some great tips on reducing costs from our resident expert, Doug McNeill.

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An effective ordering system is crucial to a seamless build. Time really is money, so you don’t want to incur downtime while you’re waiting for orders. Instituting a purchase order system will help streamline your process and reduce build times and you will recoup the software costs in no time. Check all invoices against your purchase orders and pay only your purchase order amounts and don’t accept invoices without a discussion with your supplier or trade for accuracy. “Trades prefer to work within a system because they know what is expected and when it is to be completed. That makes them more efficient and cost-effective which in turn makes you more efficient and cost effective and, if changes are required, document them so everyone knows what to expect,” says Doug.

Effective and accurate purchasing and estimating can only occur when you take responsibility for these tasks. Don’t rely on vendors or other players to do this for you. Accurate numbers will mean no hidden costs for you or your homeowners.

Try to minimize your variances. Where variances are unavoidable, a purchase order system can help you to control costs.

Trade Wisely

Work more closely with your trades to streamline the process and ask for their input on how costs can be reduced. Your end of the bargain will be to provide a clean, safe, efficient workspace and proper scheduling so that they know what to do and when to do it. Ensure that the worksite is properly prepared so that they can come in and do their jobs as quickly and efficiently as possible.

Constantly re-evaluate your trade relationships to ensure that you are working efficiently and cost-effectively. Routinely invite quotes from various trades to compare costs and quality.

Don’t be enticed by the convenience of turnkey trades (those that provide and install materials) as these may or may not save you money but they could save you time, so study them carefully. Do your homework to make sure you are getting the best deal.

Keep your jobsites neat and orderly. It is also essential to ask trades to protect the things they install. An OSB panel over a bathtub or protection on a doorframe can save them from damage and save you unforeseen costs. Keep an inventory of all the materials on the jobsite and return unused materials for a refund.

Negotiating and Marketing

The role of the homebuilder is a complex one. You must be able to provide everything from creative designs, to precise estimates and deliver great workmanship all on time and in budget. With so many balls to juggle, it’s often the marketing and negotiating skills that take a back seat.

The art of marketing your homes and services is crucial to your success and your negotiating skills are just as essential for improving your profits. Whether you are negotiating with the homeowner or with your suppliers, you need to be able to get the very best deal for yourself.

Increasing profits requires some upfront planning, implementing systems and creating detailed plans so everyone knows exactly what is required of them. In areas where you lack expertise, outsource these tasks to professionals in order to maximize your efficiency and profit. Planning, organization and systems will streamline your builds and help you to produce high quality products at the lowest possible cost.

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