With the rise in construction costs set to continue, we look at how contractors can minimize the fiscal pressures of the last few years and reduce their outgoing costs. But firstly, why is there a rise in construction costs?
The Reasons Why Construction Costs Are Rising
Like many elements of life in 2023, the cost of everything has increased, from the fuel used to transport you between jobs to the increased cost of materials. Furthermore, when you consider the chronic labor
shortage across all industries, the need to increase employees' wages to compensate for the cost of living crisis, the increasing energy costs, and the international sanctions that have been introduced, it is clear why construction costs have skyrocketed.
The most recent Building Materials & Components Index reported a "26.4% increase for 'all work' for June 2022 year on year, with costs increasing month on month."
So how can contractors combat and manage the increased costs of construction?
1. Buy Competitively Priced Construction Materials
One of the easiest ways to ensure that you are keeping your outgoing expenditures to a minimum is ensuring you are getting the best price for your materials. Traveling down to the builder's merchants and picking up the supplies for each day can increase your cost substantially, especially if you don't have an account.
However, when you compare pricing and find a competitively priced supplier who can supply you with materials in bulk, you can decrease your overall cost considerably.
Furthermore, the added fuel cost for transporting these supplies can add to the sum total of your job. Therefore, finding a construction materials supplier that can deliver directly to your site, yard or warehouse can be greatly beneficial when you are looking at making a reduction in your outgoings.
Fastbuild can deliver your building materials and supplies directly to your site, office or job for free on all orders over the value of £50, and we will deliver it within the next working day. We price all of our products competitively, and with our customer-centric approach to building supplies, you can be sure you get the best deal and the best service.
2. Keep Regularly Needed Construction Materials In Stock
Another way to ensure you are not forced to collect overpriced essentials when building materials run low on a project is to keep a supply of your commonly used products. This can prevent unnecessary spending on travel from collecting the materials and buying small quantities that often have a higher cost per weight than bulk items.
One building supply that is essential to have a regular stock of is fixings, such as screws and nails. You can browse our range of fixings to find the type you require.
3. Prioritise Early Planning
When beginning a new project, you can save yourself time and money with proper planning. Here are the key elements you should estimate before setting foot on a site to begin work.
- A timeline for the construction of the job.
- What materials will you need?
- How much of the required materials will you need?
- An estimate of how long each element of the project should take.
- The materials you will need for each stage of the construction.
By answering these questions prior to beginning a job, you will reduce the risk of underestimating the time required to complete the job as well as the possibility of wasting time collecting materials. You can start each day with everything you need to make as much progress as possible. By being prepared, you can reduce the following:
- The man-hours spent on the job.
- The fuel used for transportation.
- The materials required for the project.
4. Improve Material Management
Another factor that can increase the overall cost of a construction project is poor material management. By this, we mean using more materials than necessary to complete the job.
When purchasing the materials for a job, it is good practice to over-order slightly to account for any mistakes made. However, you will want to keep this over-order margin as low as possible, as the closer your material purchase is to the actual amount of materials used, the more money you will save.
On a large-scale job, it can be greatly beneficial to hire a quantity surveyor who will ensure the most accuracy when ordering, and when that order is for a large site, accuracy is vital in keeping costs to a minimum.
Furthermore, having a material waste record for your workers to log their waste will encourage them to cut their way to a minimum and allow you to see where the biggest amounts of waste are occurring.
5. Increase Your Quote Margin
It is important to consider raising your prices to account for the risk of increased material costs and increases in wages. How much you raise your price should depend on two things;
- The length of the job.
- The materials needed for completion.
Completing a small extension or reservation provides less risk of unexpected increased cost as the climate in which you price the project will most likely be the same as when you complete the job. However, when pricing a large-scale job, it is vital to consider the projected inflation of materials and labour, as the average cost can double in the span of a year for certain items.
It is to be expected that providing competitive quotes is a must to ensure you don't lose bids from prospective clients. Therefore it is a balancing act between minimising potential fiscal inflation risk and still providing a quote at an industry-standard price. So do your research, look at your competitor's pricing range and the forecasting of inflation and act accordingly.
6. Include An Increased Cost Clause
Another option to protect your income is to include an escalation clause in your contracts. These clauses stipulate a predetermined allowance percentage of cost increases. This allows you to keep your quotes at a reasonable price while still mitigating the risk of increased costs.
An example of this in a contract may stipulate that if material or labor costs increase more than 5%, the contractor has the right to request additional funds from the client.
Finally, and most importantly, it is imperative that you maintain a clear and continued line of communication between your client and yourself. From the first interaction to the finalisation of the project, both parties should be made aware of any changes or challenges faced in the budgeting of the job. This way you can avoid any unnecessary conflict and come away with both you and the client satisfied.
You can check out our range of construction supplies and materials available at competitive pricing and ready for direct delivery.
