How to reduce the high costs in your construction business

Written by LetsBuild

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Running a business comes with many costs. But you know that. Sometimes I get the feeling someone will come with a check for the air I’ve been breathing throughout the day. There are many expected and unwanted costs you need to take care of. I haven’t met a construction business with low costs. It’s impossible.

Take a look at the finances of your last month. Can you calculate the total cost? Sometimes it’s hard to pay attention to these details. You should. Costs take your money right in front of your eyes.

Talking to a friend recently and seeing his problems encouraged me to share something with you. The “tl;dr version” is that you can do something to reduce your high costs. This could save you millions of dollars if done right. Maybe this sounds a little bit too optimistic, but it makes sense. And here is how:

Vehicle fleet

If you are dealing with a large truck and vehicle fleet, you need to pay attention why their operating costs are getting bigger every month. Analyzing is the key here. If you can’t do that, find someone who can. Analyze the size and quantity of the whole vehicle fleet. The final result will show you their efficiency. Determine whether you need to sell them and buy new more efficient ones, or you will keep spending money on fixing problems.

Go green

Everything is recyclable. The whole “green” standard environment is taking a huge step forward. What was only for the home, now can be applied to the businesses, as well. Everything can be reused. Starting from disks, paper, folders and much more. After it’s impossible to reuse it, recycle it. There are two advantages to this:

  • It will reduce the purchasing costs
  • It will reduce the trash collection bill


How often your employees come with a solution? They are the first-hand users. If this didn’t happen so far, you have to inspire them to do that. Credit them for coming up with the cost-cutting idea that will save money. If you don’t know where to start, a good first step is to brainstorm ideas how to honor your employee.

You can insert some employee discounts, extra time off, free lunch for a week or simple cash bonus will do the trick. If it saves money for the company, then this idea deserves better credit.

New technology (hardware and/or software)

Your outdated technology spends your money more than it brings. Maintaining the old technology (hardware and software) every other week has already made a significant hit on the company’s budget. It probably doesn’t have some features you need for a certain project. You are forced to hire a third-party professional to come and solve the problem.

That costs additional money. So, what do you do? You go for a new software or/and hardware that works. It will be a one-time investment for a long-term profit. The need of maintenance every week will be gone. The cost that comes along will be reduced to a minimum.

Multipurpose labours

This one is a tougher, but it’s worth to try. In times when we all focus on doing more for less, multipurpose labours are very welcome. What does it mean? Look for specialists in your team who have the ability to play multiple roles.

Change orders

Don’t forget the change order while you are building. Make sure you have invested in tightly controlled change order process. You need to make sure everything is done beyond the scope and very well documented. Every additional cost will go through an approval. By doing this, you will have a full view of the circumstances and changes that are occurring.

Transaction taxes

Every time is the last time. When in a hurry, you always buy something that has large tax attached to it. You swore that would be the last time and move on. It never is. All construction materials can be purchased tax-free and warehoused until you need them. I don’t know if you know this, but transaction taxes are not due until finally transferred to the company doing the construction.

Spend money

At first sight, this is completely the opposite of what we’ve been talking above. If you get deeper in this “spend money” thing, you’ll see it makes sense. How? By investing in the future of your key employees. They need to be kept happy at all cost. That’s you making sure that they won’t bail on you during hard times. Invest in safety programs to lower the compensations costs for workers. Consulting with them how high costs can be reduced is another extra point you can get from them.

These are a few key things you can do that will help you reduce your costs. If you are ready to start reducing cost i.e. saving money in the software/technology part, consider these valuable steps you need to do to estimate your construction work properly.  See how an effective cost estimating strategy can help you optimise cost. Top it all off with a free ebook on increasing productivity for your construction business and you’re on your way to making quality projects.