- The construction industry comes with direct and indirect costs, such as labor, materials, and weather delays.
- There could also be some unexpected or lesser-thought-of costs affecting your bottom line.
- Poor planning, not taking safety seriously, a lack of automation, and job site thefts may result in unexpected costs.
Construction is a cost-intensive business. Company owners have to account for direct costs, like labor and materials, and indirect costs, like weather delays or project changes—all while maintaining a strong cash flow to keep the project going.
While many costs are expected, you may be shelling out extra cash for reasons you didn’t anticipate, and sometimes without even realizing you’re doing it. Have you considered what’s costing too much on your job site? Here are four culprits in creating added cost:
1. Poor Planning
“Time is money,” says the old bromide, and it’s true. Proper planning on a job site may take a little extra time (and money) before you break ground and at the beginning of a project—but it will be a money-saver in the long run.
A pre-construction plan outlines the scope of the project, sets a detailed schedule, establishes a budget, and lists needed permits. The planning phase should also cover how possible delays—due to bad weather conditions, for instance—will be handled. Planning should also include creating a labor schedule as well as an equipment and materials list. Having a plan has the potential to boost productivity and reduce labor costs—whereas lack of planning leads to chaos and wasted time on the clock.
2. Not Taking Safety Seriously
Construction is a dangerous industry and keeping workers safe is a top priority for most construction business leaders. A safety-first approach is also great for your bottom line.
Investing in safety will reduce workers’ compensation costs, insurance premiums, overtime, and lost productivity. It can also help you with saving on the expenses of hiring and training new workers. Research shows that every $1 invested in safety on the job site can lead to a direct and indirect cost savings of $3 or more. To promote a culture of safety, foremen or project managers should hold daily safety meetings to go over the day’s projects, the equipment to be used, and potential hazards. Also, be sure that everyone is wearing protective gear and that they take regular breaks.
3. Relying on Paper
Technology is a major investment for most construction companies, but it can pay big dividends. The more processes you automate, the more productive and efficient your team will be. One area that can really save you money is doing away with paper time cards in favor of an automated timekeeping system. These solutions are more accurate and can help you keep track of remote teams—and you can reduce administrative costs associated with processing paper time cards.
4. Equipment and Materials Theft
Job site thefts cost the construction industry up to $1 billion per year, according to the National Equipment Register. Replacing the lost equipment or materials is costly, but that is not where the expenses end. Thefts can also cost you by raising insurance premiums and delaying the project’s schedule. To protect your job site, add signs stating “24-Hour Surveillance,” plus security lighting and barriers. Also, be sure to keep detailed lists of the tools and equipment on the site so you can keep track of everything and file an insurance claim if something turns up missing.
As you evaluate your job site costs, consider these four factors and how they’re impacting productivity. Some of these areas may be costing you more than you think.