19 May How to drastically reduce construction costs for builders

Knowing how to reduce construction costs can help you revolutionize your business model so that you run more cost-effective processes and maximize returns.

There are several ways to save money when operating a construction business. Here are some tips to help you spend wisely and save construction costs when completing your next build.

Reducing costs during the design process

Reducing construction costs during the design process could be the key to reducing the total cost of your project. Working with clients to modify design and project scope is an important part of controlling project costs and realizing savings.

During the design stage, you and your clients establish the structures, plans and guidelines you will adhere to throughout the rest of your construction project. By making cost-effective decisions early on, you create a clear budget that you both agree to follow. This is your one-way ticket to creating your client’s dream home without unnecessary financial stress.

These are some ways to reduce construction cost during the design phase of a building project.

1. Reduce scope

It’s important to always be realistic about project scope when undertaking a construction job. Setting clear and achievable expectations can enable you to plan effectively and budget realistically.

As you plan a construction project, think about the financial parameters you’ll need to work within and identify design decisions that may increase the project’s total cost. Communicate clearly with clients to identify areas where changes might be necessary to accommodate your finances. The design stage is a good opportunity to reduce project scope and eliminate costly features that could push the limits of your budget.

2. Reduce complexity

Similarly, reducing project complexity is an easy way to bring costs down during the planning and design process of a construction project. Often, overly complex design features and elements can be expensive and may also be at a greater risk of costly construction material orders and scheduling complications.

By examining your design plans closely, you can identify areas of unnecessary complexity and work to refine and simplify project demands. This will help to save you money when building commences, and it may also make for a smoother, less demanding construction job.

3. Change materials or systems

Sometimes, the best way to save money in construction is by simply changing your materials or systems. Because the most obvious answer isn’t always the right one, it’s important to always consider all of your design options before finalizing plans. This way, you can be confident that you’re making high-quality and affordable choices.

When creating designs for a construction project, think about all the possible solutions to every problem. Some materials are more expensive than others, so when you can, look for cost-saving alternative materials to use in their place. For example, could you reduce costs by choosing vinyl flooring material instead of hardwood? Consider how you can adjust your client expectations to meet the project budget without compromising on overall aesthetic or quality.

How can builders reduce construction cost?

Once designs are finalized and building commences, there are many more ways to reduce overall construction costs even further. If you think strategically, it’s possible to make budget-friendly decisions for the good of your project and your bank account.

1. Consider material alternatives

First, consider material options. Even once the design stage is complete, there are opportunities to alter your plans and accommodate more cost-effective building materials. When these are used broadly across your project, you could save a significant amount of money. Discuss any potential material usage changes with your client to ensure that they are happy with alternative options.

Before you begin work on each new phase of a building job, take a step back and consider whether your choices are the right ones. Could you maintain a standard of work while also saving some extra cash here? When looking for areas to cut costs, it’s a good idea to focus on the small things.

2. Streamline communication

Clear communication makes it much easier to understand and adhere to a construction budget. Communicate regularly with all project stakeholders, including your client any other builder or contractor working with you. This way, you can ensure that everyone remains on the same page and aware of construction expense considerations. You can make sure no important considerations are forgotten.

Throughout your building project, aim to communicate with your client and any other contractors regularly. Using software like Buildxact, you can set tasks and reminders as you build your project’s cost estimate. This makes it easy for everyone to stay on track as the job progresses.

With software as a guide, you can see how work progresses against the schedule, which can prompt you to ask questions and have your team think about construction progress, time demands, financial constraints and material availability. This can help you predict and manage building construction costs with much more accuracy and confidence.

3. Eliminate change orders

Change orders can be a major source of construction cost, as clients alter project plans and processes over the course of the build. When these alterations are not factored to your initial budget or plan details, they can cause financial difficulties, even impacting the overall project outcome.

Reducing or eliminating change orders helps you to feel confident and secure in your construction plans. You can do this by communicating your change order processes or expectations with clients before building begins. Remember to be clear and respectful, ideally including change order permissions in a contract.

When mid-build changes are not permitted, you can get on with the construction process, not worrying that project demands could be altered at any moment. This can help you be more resourceful with your available budget and could even reduce the funds you need to set aside for problems or emergencies.

4. Properly manage subcontractors

Employing subcontractors is often an important part of construction work, but labor cost can also be expensive. While you always want to pay contractors fairly for their work, renegotiating fees can be helpful in lowering labor costs and bringing your expenses down, saving money that can better be used for other business administration or construction purposes.

Choose your contractors carefully, looking for the perfect combination of skill and affordability. Before you start work on a new build, set clear contractor prices that allow you to compensate contractors without exceeding your financial limits. You can schedule skilled contractors effectively using Buildxact software, helping you keep track of all staff working on a project. Clear schedules also prevent any miscommunication about when work crews should arrive on a job site. Poor timing can lead to work crews being unable to work, leaving a job site, and not being available later when you need them.

5. Buy dynamically

Dynamic purchasing is a well-known concept in the construction industry, providing you with opportunities to explore the most cost-effective options for your business and project. Buying dynamically allows you to procure all the materials and services you need from a wide range of suppliers, searching for the highest quality at the lowest prices.

Buildxact software offers material suppliers and dealers the ability to integrate pricing directly into the software so that builders can easily see prices as they build their cost estimates. This helps you make budget-friendly choices at a time most convenient to you.