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| 262 |
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| 4.0 out of 5
(2 votes) |
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| Author: | Craig Pierce |
| Created: | 6 months ago |
| Updated: | N/A |
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In Construction the #1 rule is safety. Without the principal of safety, the things we build and the people we employ will not be around once we finish. I hope that fact is not up for debate in 2010, so then the question is what is the second rule of contracting? Cost Control.
This past weekend millions of citizens went to their local Home Depot, Lowes, or other hardware store to purchase a new light fixture, plumbing pipe, or windows. Every one of them doing the work of a contractor with some major differences. First let me set the assumption that everyone who went to do their home project was qualified to perform the work (which as we all know is not the case). With this assumption in place what is the difference? Controlling cost.
What really is the difference from a guy doing a remodel at home and contractor is the ability to control costs. Each contractor is in a competitive marketplace. We must compete for the work we get and one of the largest factors on winning that work is price. Once the work is won, the only way to stay in business is to control the costs. If we have to make 5 trips to the hardware store, we purchase the wrong material, we don't understand the install and stand around thinking about what to do next, or worse yet we install the work and then have to remove it; we will go out of business. None of these factors have such an adverse affect on the home project guy.
So what is controlling costs? Sure it can be cutting non-essential costs like color printing, fancy cell phones, and cool executive cars, but in my opinion that is not controlling costs that is smart business. If your business is spending money on items that do not return a value greater than your expenditure it is bad business.
Controlling costs goes back to the bid. Since we are competing on the project, we are placing a value on the work that we believe will cover our costs and return an equitable profit for the work we are doing. If we have established that benchmark, then we must monitor and work within it. Controlling costs is about monitoring and making good decisions throughout the project to ensure that our costs are maintained so we can stay in business. There are no silver bullet solutions to this problem. We cannot go out and purchase a single software solution or implement a single program that will ensure we are controlling costs. It takes discipline.
Like safety it is a cultural issue. If everyone in the company understands that their #2 job is to control costs, you will see results. People will begin to understand what things costs. The cheaper of two options. What the budget is for a given portion of work. How much installed product must be done in an 8 hour shift.
Controlling costs has so many benefits. Not only to your bottom line, but to the employees in the way of job stability, incentive pay, and even satisfied customers. When costs are controlled, there is not a combative approach towards your client because you are out of money. Since time is a key element in construction and is so closely related to cost, you will be finishing on time which always makes for a happy client.
Think about the ways you can assist in controlling costs and how your company can improve on controlling costs, it will make you a better contractor and showcase the difference between the professionals and the weekend warriors.
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Posted by:test3
on
6 months ago
My comment is common sense (or cents), but you should always take into consideration the long term (or behind the scenes) costs or savings with the direct up front costs. Sure, a certain tool may seem too costly to spend money on in this economy, but will that tool save you more money and make you more profitable by saving man hours, making the job safer, etc.? Why would you pass up saving $1 for the cost of a $0.01? Also, be careful not to spend a $1 to save a penny!
Maybe our competitors that we thought would be out of business some time ago because they keep low-balling bids are doing better cost analysis than we are!
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