A construction company that grows must be conscious of its operating costs. After all, there are only so many ways to make a firm profitable, given that building materials and labor will inevitably cost more than they did in previous years. To stay competitive in the current economic environment, a construction company must adapt its practices to control costs while maintaining or increasing production. This article presents six concrete strategies for reducing operating costs at your construction company.
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1. Rent Specialized Equipment
Does your construction company rent equipment or machinery to perform certain work? Many companies do so because it is more cost-effective to rent specialized equipment and machinery than it is to buy that equipment outright. If your firm consistently rents the same tools, machines, and other tools, you might consider negotiating a longer-term lease agreement with the materials supplier or owner. Lower monthly payments will reduce overhead.
2. Hire Temporary Workers
Use temporary workers when possible rather than full-time employees. The hourly rates for temp workers are generally lower, and the firm does not have to invest in employee benefits. However, ensure that temporary workers are available for your projects before hiring them.
3. Replace Old Technology with New
If your construction company has technology from the past decades, consider replacing it with new software and hardware. This strategy should be considered at least once every five years. However, ensure that you replace older technology only when the cost of updating and maintaining it exceeds the cost of increasing your capital base. Otherwise, you will not realize significant cost savings by updating the technology.
4. Implement Energy-Efficient Sustainable Practices
Your construction company should install energy-efficient light bulbs in every work area and purchase energy-efficient equipment. This will greatly reduce your company’s operating costs and help improve the environment. For example, you might consider installing solar panels for some or all of your energy needs.
5. Train Employees
Training new employees is always free; it can be an easy way to reduce operating costs during the first few months. Provide your new hires with a laptop or smartphone, ensuring they have access to the internet and other training materials. Let your employees know they must complete courses to learn about your company’s products, services, and procedures. This strategy will help you increase productivity and reduce operational costs.
6. Practice Preventive Maintenance
Many construction firms do not have a dedicated maintenance team, so those employees responsible for maintaining the equipment and machinery on-site rarely take the time to perform general preventative maintenance. Few things are more costly than replacing entire machines or tools because they broke down due to a lack of preventive maintenance. To reduce your operating costs, ensure each employee knows how and when to perform preventative maintenance for tools, machinery, and other equipment.
There is no reason why a construction company cannot increase production in the current economic environment while reducing operating costs at the same time. A construction company can do more with less to stay competitive, from implementing new technologies to streamlining operations to reducing labor costs.