Georgia Construction, Bond & Lien Law Blog

Cutting Construction Costs

Posted in Miscellaneous,Practical Tips by Administrator on the May 15th, 2012

Today, the Cobb Law Group is pleased to welcome a guest post from a consultant to the construction industry; we hope that you will leave us comments and feedback regarding this article!

During tough economic times, cost-cutting is essential in order to stay competitive. However, if done the wrong way, Cutting Costs on Construction Projectscost-cutting can have a detrimental impact on the project’s outcome. Construction project management techniques can help keep the costs of a project down without losing quality in your work. In fact, with the right management and smart choices, finding ways to save money can lead to improvements in field operations and business as a whole.

Clearly Communicate with Divisions and Workers

Moments of miscommunication can easily create complications which take valuable time to resolve. Communication between divisions of your business should be clear and effective. You may want to research technologies to find out if there are new ways you can streamline your communication process to increase efficiency. Of course, you also need software that is within your budget and that has benefits which will lead to savings over time.

In field operations, make sure your foremen provide objectives and clearly state time limits for every task. Sometimes foremen create a deceptive impression of being effective as managers even when they do not state daily goals in numbers. In general, workers respond best to specific, measurable tasks with reasonable deadlines. This keeps everyone on track and focused.

Have a Plan of Action for All Team Members

Develop daily action plans that fully utilize your labor force. Make sure that your workers are putting energy in the places where they work most efficiently in order to save time and money. In the construction business, daily plans change according to outside factors such as suppliers and weather conditions. Create action plans with built-in flexibility, and use daily logs to record progress, note barriers to completion and log the effectiveness of your plans.

Always Improve Field Performance

Try to lower construction costs over time rather than gradually raising them. This is a key difference between being an employee and being a business owner or manager. An employee can gradually ask for more money as expertise grows. A business needs to become increasingly competitive in order to maintain position in the market. The companies that prove successful tend to adopt this strategy. Use all the experience you gain to find ways of improving efficiency levels for future projects.

Closely Manage Indirect Labor

Indirect labor costs needs to be clearly calculated in order to improve field performance.  Indirect labor can include time spent on paperwork and in meetings, time spent driving on the job or briefly repairing equipment and preparation or light work time in the yard.

To manage costs, make sure to include these tasks in your cost codes. Have your laborers report the time they spend on each one. If you are not currently monitoring your indirect labor costs, you may be able to save anywhere from 10% to 30% of your project budget.

Know When to Negotiate

When saving money, it is better to have a few suppliers and maintain strong relationships with them rather than to have many suppliers and weaker networking ties. With strong relationships, you can often negotiate better deals when you need them. If your suppliers feel invested with you, they will be more likely to work with you to maintain your business and theirs.

Maintaining Your Construction Business

Cost-cutting always needs to be done wisely and with future business in mind. Basically, you want to optimize your construction work so that when economic times change, you are simply more seasoned and more competitive. Use your new initiative to improve your field performance and better manage your budget, saving money, maintaining quality and strengthening your business.

Erin Palmer works for University Alliance and writes about many of their PMI certification prep courses. Each of UA’s partner schools offers helpful articles on topics such as construction project management training.

 

This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

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