Contractors in the building and construction industry have many ways to save money on their projects – without reducing the quality of their work. Instead, there are several business strategies contractors may consider introducing to their operation that will result in cost savings, a more efficient operation, and higher profits.
If the following cost saving tips for contractors appeal to you, why not plan to introduce them into your contracting business and gauge how they help your business save money.
While your customers may not like it, just like the need for business insurance, such as contractor insurance, price increases are considered an essential part of running a successful business
Bulk purchase your materials
When you buy materials in bulk, the cost of individual items drops, which makes buying in bulk a great way to cut your costs. To ensure that your bulk purchases are in good condition when you come to use them, carefully consider how you store them. For example, you don’t want paper products to be stored in a damp garage or other storage space where moisture or rain could cause mildew. A dry, clean storage area is the best place to store most materials.
Buy wholesale building materials
Avoiding the local home improvement stores is one of the best ways to reduce your building material costs. After purchasing the materials from a wholesale distributor, the store will mark up the materials for a profit. Wholesale purchases enable you to eliminate these additional costs. Wholesale dealers often work directly alongside contractors to offer bulk discounts and arguably the best prices for the materials you regularly use.
Improve your onsite efficiency
You may reduce the amount of time you spend by using the most efficient equipment that enables you to complete the task in the shortest time and without compromising quality. Instead of using people and shovels to dig a hole in the ground, consider investing in an excavator or trencher. Although such high-powered equipment is more expensive initially, they will save you time and reduce employee stress and potential injury.
Embrace just-in-time procedures
You can improve your profitability by implementing leaner business practices like just-in-time material use. Some products, like tools, can be moved to different job sites. However, you should consider using a just-in-time ordering method for specific projects. To reduce costs, this method orders only the materials required for your current project. This approach will also save you money on storage costs.
Invest in quality tools
The quality of your tools is just as important as the quality of your building materials. Invest in tools that are durable enough to withstand the harsh conditions encountered on construction sites. While quality tools will cost more than inferior tools, they will undoubtedly last longer and won’t need replacing for a long time. Also, be sure to check for any warranties that your tools may be sold with.
Know when to rent equipment instead of buying it
You don’t necessarily need to purchase everything you need to do your job. Renting equipment can save you money if you only intend to use it a few times a year. If the cost to rent the equipment is less than how much you would spend to own it with maintenance, purchasing, and storage, renting will likely be your best option. If the scale tips the other way, you will save money over time by purchasing the equipment and owning it outright.
When it comes to expensive heavy equipment such as loaders, backhoes, and cranes, renting will almost always be a much more financially sound option. Consider how often you will use the piece, and what it costs to rent. Once you do that, renting may prove to be the more economical decision.
Use your tools wisely
If you have employees or apprentices, you may benefit from monitoring how they use your tools at work. Make a list of the tools and equipment that you have. Sign out all equipment needed by your staff when they need it. To avoid confusion, mark all tools owned by the business so they don’t accidentally go home with your staff at the end of the day. Another option is to have your workers purchase the tools or provide their own tools.
Eliminate construction waste
While just-in time purchasing can help reduce excess materials, you will likely still have large quantities of construction waste on your job sites. To reduce waste disposal costs, look for ways to reuse and recycle your excess materials. Purchase products that have less packaging. You will not only reduce waste at your site, but you will also save money on construction costs due to your staff being able to unpack and use the materials faster.
How are you reducing your risk?
Regardless of what industry you operate in as a contractor, or where you work in New Zealand as a contractor, BizCover is your one-stop shop for a wide range of business insurance products that you may be considering to reduce the risks to your business, including contractor insurance*.
BizCover helps contractors throughout New Zealand to reduce the risks to their business via contractor insurance. Choose BizCover for your contractor insurance, compare competitive quotes online from leading insurers, get covered in less than 10 minutes, and get on with your day. If you’d like to chat about your contractor insurance needs you can reach us at 0800 249 268.
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2022 BizCover Pty Limited. BizCover Limited is owned by BizCover Pty Ltd (ABN 68 127 707 975).