Construction projects are notorious for going over budget. In fact, it’s so commonplace in the industry that it’s more unusual to deliver a project on or under budget. However, this isn’t ideal for those looking to maximize profits and keep the project under control.
We at Construction Guide believe sticking to budget is one of the most important things in a construction project, simply because going over budget can result in more problems later down the line. While it’s not always possible to stick to your original figures, these tips should help you figure out how to save money during each phase of your construction project.
The first phase in any construction project is initiation, and this is the best time to troubleshoot potential issues in advance, as this can make them easier to manage later. Similarly, it’s imperative to start off on the right foot in terms of communication and time management. Poor communication can be a signal for disaster, particularly in terms of sticking to the budget.
It’s worth conducting a feasibility study at this point in the project because, if nothing else, it indicates whether a project is actually worth investing money in. After all, it’s better to know this information now than later once time and money have been sunk into it. Similarly, a feasibility study will highlight any potential risks, allowing you to mitigate them before they happen.
Feasibility studies cost money; this is hardly news. However, the money you spend here will be saved in the future simply through the risks you’ve been able to mitigate. That said, it’s important to source several consultants or companies and to compare their quotes. Although you’re looking to save money, it makes sense to go with the company that can best meet your needs.
Design and planning is arguably one of the most important steps in a construction project, and is also one of the easiest places to save money. A good construction plan will allow you to understand and manage any necessary changes before construction begins.
When beginning planning, make sure you invest in good quality collaboration software. Communication is vital during this stage, so you should seek a program where everyone can upload and view documents in real time, allowing everyone to always be up to date with the project. Similarly, good collaboration software should also automate some of the more mundane design tasks (administration, for example), so that everyone is free to get on with their jobs.
Aim to have your designs completed as early as possible so they can be reviewed and revised as necessary, and should have a comprehensive scope of work attached. The earlier this happens, and the earlier different groups begin to collaborate on the project, the smoother things will be. Working out any issues while the project is still on paper will save massive amounts of money in the later stages.
The planning phase is also the best time to set your KPIs, which will define the areas you concentrate on later in the project. If you’re budget-minded, then focus on things like material use and employee productivity, as these are the biggest areas for potential loss once construction actually begins.
The procurement phase is when things start becoming more real, as it’s when you start gathering materials and equipment. You should use this time to review your relevant budgets and work out any shortages before procuring. Also, a good strategy should balance cost, quality, and availability without prioritizing one too much over the others.
Sourcing of materials is another great area for reducing overall project costs. There are few situations in which spending loads of money on updated materials translates into later rewards. For the most part, stick with established building materials, as these will allow you to manage your budget better.
This is also a good time to detail your main areas of material waste, and how best to avoid these. Careful planning of how you plan to use your materials will result in less waste. Buying in prefabricated materials (if applicable) can be a good way to save money, both through material and labor costs.
Sourcing equipment for your project is a difficult thing to balance. While inexpensive equipment might sound like you’re saving money, it makes sense to invest in higher quality equipment and make up the potential budget deficit elsewhere. Better equipment will last longer, meaning fewer repairs and replacements. Equipment is arguably one of the most important factors in a construction project, so make sure you invest in its quality.
If you’re going to be using lots of machines during construction then it can also help to concentrate on energy efficiency. Something like fuel is often overlooked as a major expense, but it’s surprising how quickly it can add up. Newer, more technologically advanced equipment should be more energy efficient, and the savings on fuel should offset the initial cost.
Providing you’ve been using an effective strategy to this point, there should be few issues as you move into the execution phase. Instead, you should use this spare energy to proactively mitigate construction risks before they start, particularly those related to on-site safety.
Firstly, make sure your site is secure at all times and protected by the relevant procedures. If it’s a big project, consider hiring security, as this cost will massively outweigh the cost of replacing stolen equipment and materials. Along with this, make sure your employees are involved in keeping things secure and are aware of their own accountability within the project.
Along with software during the design phase, be sure to introduce it into the execution too. If everyone is on board with the software then you’ll see a jump in productivity. If nothing else, reporting errors or issues in real time allows them to be managed faster, therefore reducing costs.
Although it’s obvious, site safety should be a priority. Start by keeping everything tidy at all times, as this is an inexpensive way to reduce the risk of injury. Make sure all staff have access to the correct safety equipment and that you conduct regular risk analyses to confirm everything is running smoothly. Staff safety training is a must at this stage too. Investing money in safety results in fewer injuries and therefore fewer payouts.
During the execution phase you should be careful to monitor everything closely, as this prevents things from slipping through the net. Conducting regular reviews of your project will let you adapt quickly and optimize anything that seems to be underperforming.
Each project will have its own KPIs (Key Performance Indicators), which you’ll set during planning. Be sure everyone knows these and what to do to achieve them. Monitor things like staff productivity, progress, and material usage. These are arguably the biggest factors that impact cost, and are also easy to identify and manage.
Consider introducing software to monitor your materials, as these can become a cost that spirals out of control. Keeping track of what’s being used where will help to reduce costs because it should help you to identify waste, which can then be acted upon. Materials are one of the biggest costs in a project; so don’t waste money by not managing them properly.
Although mentioned in the last section, monitoring is also necessary on project risks. These should be one of your main priorities during the actual construction phase, and their ability to save you money shouldn’t be underestimated. Staying ahead of any risks or potential changes in design results in higher productivity through less lost time.
Once the project appears completed, it’s important to perform proper closeout. Doing so will ensure everything has been done properly and safely, and that all paperwork and administration is complete.
This is the best time to ensure all inspections are complete and signed off, and that you’re happy with how things stand. Similarly, it can be a good time to identify any deficits between material use and cost (although with a good strategy this should be minimal).
It might seem like an obvious point, but be sure all invoices are paid before you close the project. It’s unlikely any construction companies would deliberately ignore invoices in an attempt to save money, but this will become significantly more expensive in the future if they’re ignored.
It’s also a good time to review your strategy and work out why you might have still gone over budget. Sometimes it’s impossible not to, but having a coherent project strategy should help you to identify areas of weakness much more easily.
Saving money during every construction phase isn’t that difficult. Essentially it boils down to proper planning and communication, and setting realistic expectations. Here at Construction Guide, we want to ensure every part of the project is managed effectively and kept within budget. Hopefully these tips will set you on your way to a properly managed and budgeted construction project.