There are several costs associated with a construction project, including paying workers, purchasing supplies, etc. Project management costs can take up a huge percentage of your construction project budget, which is why it’s essential to keep track of your cash flow while working on a construction project. One way of doing it is by incorporating construction project cost management software. It will help you keep an eye on the smallest to the largest costs involving the project.
In this article, we are going to list down 7 effective tips to offset the cost of construction project management.
Keep reading to learn more!
1. Embrace Digital Tools
One of the reasons why construction project management takes up so much of the budget is that many companies are still using traditional and old school methods of management. These methods are usually manual and not only cost more money, but also take up more time.
That is why you need to go digital. Consider replacing physical paperwork with digital files and data. You need to centralize your data on the cloud because it becomes way more convenient to manage and keep track of everything. Using the cloud as your data and cost management tool makes it easy for you to access it from anywhere. There is no need to invest in licenses and in-house services.
Going digital not only keeps your data centralized, safe, and accessible, but it also saves a lot of your time. You will see a significant improvement in the productivity of your project. Once the project picks up the pace, you will earn more profits because you’ll have to invest less time and resources.
2. Reduce Costs by Renegotiating with Vendors
Another easy way to reduce costs is by renegotiating with your material suppliers and vendors for a more economical deal. The success of this strategy depends largely on your relationship with your vendors. For instance, a vendor that you’ve worked with for several years and maintained a good professional relationship would be more willing to cut you some slack than a vendor with whom you started working recently.
You can also go over your other costs of services and look for better deals. These services include your insurance policies, internet provider, cell phone services, etc. Consider looking for companies that offer the same services at lower prices. Compare different service providers and switch to the company that is offering the best deals.
3. Utilize Tax Breaks
When you’re managing a construction business, your credit and tax deductions can really offset some of your costs. The common expenses that can be deducted for construction contractions include the following:
- Equipment purchase
- Marketing expenses
- Travel costs
- Interest on small business loans
Pro-tip: Most construction businesses do not identify their workers currently. It’s essential to document your workers as independent contractors or employees. That way, you can utilize tax exemptions on the paychecks of your employees.
4. Take Care of High-Interest Business Loans
One of the most effective ways of cutting costs in any business is to pay off your business loans. High-interest loans come at a huge price, and the sooner you get rid of them, the better. Whether you took a long-term debt for investing in your growth or short-term loans to keep your cash flowing, it would benefit your construction business to cut the cost of debts as much as possible.
We recommend consolidating all your high-interest loans into one. That way, you’ll have to pay a much lower total price of the loans. Moreover, its easier to manage a single payment each month compared to keeping track of multiple loans and payment deadlines.
5. Look for Equipment Alternatives
Equipment is one of the essential parts of a construction business. When there is a need for buying or replacing certain construction equipment, always consider looking for alternatives. For instance, instead of making a budget for buying new equipment right away, you should look for leasing it instead.
Leasing construction tools and equipment is much more economical than buying them. Moreover, you will not have to look for financing options. This is an excellent strategy, especially for equipment that needs regular replacement. Instead of building up debt for financing, you can just lease the equipment.
Another option is buying second-hand equipment, and it is much cheaper than buying new ones. Moreover, assess your current equipment and see if there’s anything that you don’t use anymore. You can sell that equipment and keep the capital from them to buy or lease the equipment that you do need.
6. Improve Your Customer Support
Marketing and advertising can take up a chunk of your construction business budget each year. The best way to deal with this is to rely on your current clientele to bring in more customers for you. Instead of investing money in generating news leads with ads, you can improve your customer service so that your clients are always satisfied with your work.
Excellent customer support will encourage your current clients to bring you more business with word of mouth. Moreover, you can also ask your clients for reviews and referrals. If they are happy with your service, they will be delighted to help you out.
Here are a few strategies for improving your relationship with your clients:
- Quickly responding to queries and complaints
- Sending thank you and holiday cards to regular clients
- Offering exclusive discounts and loyalty programs
Nothing saves time and resources like automation. Consider automating your construction project management processes like budgeting, payrolls, accounting, etc. It will decrease your administrative costs while streamlining these processes for smooth running.
Construction project management can be a tedious and costly process. However, you can make things convenient by investing in construction project software to keep track of your expenses and management responsibilities.
Visit our website here for a demo and more information on construction project management software.