Tips to Maximize Profits in the Construction Industry
Construction business or any kind of business for that matter can be considered lucrative for as long as you have a good customer base and you know how to exploit ways to cut operational cost to maximize profits. Every dollar counts and, if this loss incrementally increases, this amount adds up to thousands of dollars by the time the projects ends, which can reduce your projected profits. So, here are tips to serve as guides to help cut cost in this business.
Intercepting Supply Costs
In a thriving industry such as construction, the cost of materials will always be confronted with fluctuating prices due to the supply and demand condition. Therefore, it is important that you begin the project by stocking the needed volume of materials to avoid price fluctuations and also to avoid the unpleasant situation of paying for the increase cost, instead of requiring your customer to pay more for the adjusted price, and thus reduce your profit. In order to be able to purchase supplies at a relatively low price, it is pertinent that you have a monitoring system to regularly check on the prices so that you will know as to when you should buy the materials in volume. For as long as these supplies are the standard materials that are usually consumed in any kind of construction, buying them in volume is actually cost-saving since the excesses can still be utilized in future projects.
Factoring in Health and Safety
Be realistic as occupational accidents can often occur, so observe the law which requires that companies have to establish a health and safety provision for their workers and, by so doing, you reap more benefits from it.
About 40% of accounted deaths in the workplace were caused by falling, as reported in 2014. Therefore, this should serve as a guide to always introduce safety orientation and training procedures on the workers when using ladders, scaffolding, aerial work platforms, as well as observing proper safety work practices. Bear in mind the huge losses in compensating for your workers’ deaths, as well as the immobilizing of operations, if you do not abide on the law requirement on the observance of safety procedures in the workplace.
Time is an important consideration, as your customers expect that the project will be completed on the agreed time and also, supply purchases and workers compensation are dependent highly on time.
Observance of General Conditions
General conditions, such as onsite administration, supervision, temporary facilities, temporary protection and soft costs, are always considered to get a project built. In order to prevent additional investment and lesser profit, as a consequence, look for an experienced estimator who can create an equitable budget for temporary shelters for office use and for workers to stay in.
Charges for Amendments on Change Orders
Any amendments on what has been previously agreed by parties concerned on scope, price, time, schedule or work items in the construction project are called change orders. Of importance in amending contracts in lieu of change orders is providing a good estimate cost breakdown before the operation begins again, as this will require additional expenditure to meet up the requirements on the contract.