6 Ways to Reduce Construction Costs

The construction industry in the Greater Toronto Area is highly competitive, with extremely tight schedules and even tighter budgets. Independent contractors and business owners need to plan their finances carefully if they want to gain profits on construction projects and not operate at a loss.

However, this is always easier said than done. Knowing how to reduce construction costs and managing your resources for a project can be challenging, especially if cost-cutting measures might jeopardize the quality of your work.

Keep reading if you want to learn some of the ways you can reduce costs, increase your revenue, and protect your business from financial burdens!

1. Plan for the Unexpected

While it can be tempting to just “go with the flow,” that’s a recipe for financial disaster when it comes to construction projects. Not planning ahead or ignoring potential issues until they’re affecting you is how you end up with costly schedule delays.

How to Approach This Problem

Prepare for the unexpected by clearly defining project specifications to avoid unnecessary changes during construction. Standardizing materials and designs also helps in reducing construction costs by limiting costly requests for custom-made or specialty items.

When analyzing the scope of the project during the planning process, be sure to also compare it to other jobs you’ve done. What issues did you encounter then? Reminding yourself of those could help make you aware of what could go wrong.

2. Consider Building in the off Season

While building during off-peak seasons also presents its challenges, doing so can reduce construction costs and save money. This is because the cost of labour and materials rises during peak construction season (the summer).

How to Approach This Problem

Consider starting your construction project in the spring or fall to save money. The reason for this is simple supply and demand; the key to saving money is sourcing materials and workers when there are fewer jobs vying for them.

3. Always Follow Your Schedule

Schedules are everything in construction. Failing to follow them can lead to delays and costly mistakes, not to mention a lawsuit being filed against you if either creates problems for your client and more work for your contractors on the job site.

How to Approach This Problem

Conflicts in schedules are typically borne out of unrealistic timelines and an overestimation of the availability of resources, building materials, and labour.

As such, you can reduce your construction costs by keeping a close eye on your project at every phase. This ensures you’re staying on top of resource management and deadlines that are fast approaching, giving you ample time to make substitutions or come up with a plan to finish the tasks without compromising on the quality of the output.

You can also check if your existing operations processes can be streamlined, as this frees up more time and labour for your construction project. Tracking the total cost of your operations and separating them into overhead costs and project costs can help you pinpoint some trouble spots and keep track of your finances better.

4. Choose the Right Team

One of the factors that significantly affects construction costs (and the quality of your project) is the team you work with.

From hiring employees with a good track record of finishing tasks on time to sourcing the right suppliers, choosing the right people to team up with can help you save construction costs, ensure your project stays on track, and help everything go smoothly.

How to Approach This Problem

Recruiting a team of qualified, experienced, and reliable contractors, subcontractors, and suppliers who can deliver tasks on time and within budget is vital.

More than that, however, you should preach clear communication, accountability, and coordination with your team. Facilitating a high-character culture will ensure your team does great work while helping avoid equipment theft and costly lapses in judgment.

You should also develop long-term relationships with suppliers or vendors that you already trust so you can source building materials at the best prices, reduce the total cost of materials, and lessen the need to source new connections in the future.

5. Use Cost-Effective Building Materials

Using expensive materials doesn’t always equal quality results.

As such, it’s crucial to choose the right construction materials during the project’s design phase so you avoid making changes midway through construction. This also helps prevent delays and having to redo work for your contractors.

How to Approach This Problem

Save on some construction costs by choosing materials that are durable and versatile while still being cost-effective.

It’s always recommended that you research and compare different materials that work with your construction project’s current design to make sure you’re not compromising the quality of your work. Weighing the environmental impact of the materials you’re using can also help you reduce construction costs associated with pollution.

Consider recycling some materials that could still be used for certain construction projects. Not only will this reduce construction cost, but it will also help to lessen the carbon footprint of the construction industry which currently stands at 40% of global energy consumption.

6. Get Bonded

When learning how to reduce construction cost, one final thing you should consider is getting bonded. Don’t believe the surety bond myths—these legal agreements can benefit you just as much as the project owner.

The proof is in the data, as unbonded projects default 2.5 to 10 times more often than bonded projects. As a contractor, getting bonded ensures you’re taking on projects you and your team have the capacity to complete. This, in turn, will help reduce costs by avoiding delays, issues, material shortages and more.

Reduce Construction Costs With Contractors Insurance

Knowing how to reduce construction costs can help you finish your tasks quickly and on time. However, when inevitable problems do arise in the construction process, make sure you’re protected with bonds and insurance specifically tailored to your business.

Contractors Insurance is an Ontario-based insurance brokerage firm that specializes in providing customized insurance for contractors and other professionals. Our insurance plans feature no unnecessary riders to ensure they fit your budget, while our bonds always facilitate a fair agreement between you and the other parties.

Contact us today to learn how we can protect your construction business!