By Ed Williams
A profitable construction project is a result of a successful blend of material, labor, and equipment management. In these high-tech times, self-performing general contractors and subcontractors cannot afford to rely on traditional ways of working.
To improve productivity many are switching to construction-specific software that is eliminating hidden costs that most contractors pay extra for.
When you are building an ecosystem of all things construction then it’s important to make the process of remodeling certain spaces cost-effective and transparent. But in reality construction projects come with a number of hidden costs of material utilization. So what you need to do is avoid incurring these hidden costs that often originate due to numerous factors on contractors’ and clients’ ends.
Let us examine what some of these hidden material costs are, and how to eliminate them by focusing on material workflows.
Due to pre-existing conditions
There could be hidden costs due to the number of pre-existing conditions such as layers of earlier finishes that were not visible until construction had begun; the current plumbing system happens to be not working, or the current electrical system has a wiring problem.
For a remodeler, it could mean discovering pipes or a structural column when the tearing down process begins. This will result in extra costs for redesign or removal in many cases.
To eliminate this difficulty builders must factor in contingency plans and take this into account while scheduling and planning.
Invoice Processing
Not automating tasks and relying on manual processes to carry out billings and other tasks can result in mistakes. This may result in spending unnecessary time correcting and re-filing data. With this, the problem of back-and-forth communication between field and back-office also arises.
Other than that, a lack of categorized cost codes and disjointed sets of previous data makes it tough to carry out analysis and retrieve accurate information. The result of this disorganization is that no one can be held accountable, and the entire process becomes more difficult.
The way to eliminate this problem is to rely on construction enterprise resource planning (ERP) solutions with robust accounting features. This can help in generating cost templates, in planning, and in integrating data in one place to more easily carry out financial risk analysis.
Material breakdown due to minimal inventory visibility
Maintaining accurate inventory is essential for a profitable construction business. Tracking financial information to maintain a file of billing may lead to error-prone entries. Manual paper-based processes lead to broken purchasing and this may result in profit leaks if materials management is not accurate.
This can be addressed if you choose to automate tasks and rely on a powerful construction-specific solution to maintain inventory. It will help you to get meaningful insights on material breakdown.
Ad hoc orders
There is always a concern related to lack of available data and paucity of time. Thus, an inability to effectively track and manage materials that are most often attended on an ad hoc basis can be time-consuming. Apart from wasting many valuable hours, it also impacts jobsite operations. This causes serious delays, mistakes, and higher material costs.
To keep the entire project team aligned you must pay attention to planning and scheduling. Also, tech deployment can help with integrating data, and with robust reporting capabilities of the technology solutions, you can keep track of project progress. This can help contractors plan ahead and deal with unforeseen situations such as when the cost of PVC pipe spikes because of supply chain difficulties.
Incorrect Taxes and Billing Mistakes
The cost of materials becomes high due to incorrect calculation of taxes that vary from state to state. It can lead to misidentified billing mistakes, and added charges that are rarely accounted for. This must be dealt with at the earliest by either outsourcing the task (at a nominal fee) or investing in construction solutions that have powerful accounting tools to take care of this problem.
Way Forward
HVAC and plumbing are driving growth in the construction industry. Technology is forcing contractors to consider options that take into account energy efficiency and usage while handling residential and commercial installations.
The need of the hour is doing away with outdated processes and eliminating hidden costs of material utilization. The emergence of voice-control devices at home is driving the demand for newer, intelligent home management systems. Plumbing demand has also increased when applications driven by smart tech are factored in. This is in the form of demand for water efficiency for washrooms, toilet function key, and personalization of showers. One also has to take into account faucets that are important for larger installations.
To avoid mistakes and inefficiencies you have to embrace digital systems that help in troubleshooting problems. Late deliveries, repetitive data entry, and delayed payments can be easily done away with the help of dedicated tools that facilitate communication.
By upgrading their technology contractors can rely on smart fixtures to diagnose problems and send alerts for maintenance. The construction industry is adapting to new technology that is capable of addressing maintenance work and handling remodeling demand. All this working in concert will help to bring down costs.
Purpose-built construction software allows information to flow accurately. By gaining visibility on accounting systems and processes that connect disjointed workflows, you will be better equipped to deal with hidden costs of material utilization. So get ready to mitigate materials utilization problems and become a top-performing contractor.
Ed Williams is the Senior Team Lead at ProjectPro, an integrated construction accounting software. He holds a massive industry experience and is a Microsoft Dynamics expert who is focused on successful implementations. He is a visionary leader and always aim to deliver the best to the construction and project-oriented industries.