Every contractor wants to finish a project within budget, but many fail to do so. A 2017 study in the International Journal of Innovation, Management and Technology found that nine out of ten projects experienced cost overruns. One reason for going over the set budget is inadequate planning for the cost of materials.
It’s difficult to estimate the cost of materials, as they change based on several conditions. The price of some construction materials increases when there is a high demand on the market, usually when several projects occur within the same timeframe. Other prices of materials fluctuate during inclement weather or when there’s a change of season.
It’s vital to be proactive when maximising your current budget to ensure you don’t overspend and that the project has enough money for unforeseen circumstances.
Estimating Material Costs
Before beginning a project, have a clear and accurate forecast of how much a building project will cost. Every project has a different set of variables, from the details of the construction site to the building design and status of the labour market for construction workers.
You’ll come up with an estimate of material costs after determining the building design, the scope of work and the processes needed to fulfill each task. Check historical data and various stages of the buying cycle when calculating expected prices.
Maximising the Budget for Materials
Before making decisions on construction, equipment and personnel, make sure that they are covered under the Building Code of Australia and Australian Standards. As much as you want to save on costs, you will end up spending more on fines and replacement of materials if you fail to comply with regulations.
An obvious step of cutting down costs is by controlling the quantity of your purchases. Sourcing the materials in larger bulk is less costly than in smaller, incremental amounts. Buying materials in bulk also gives you excess stock for emergency use and prevents delays in construction associated with the shortage of pieces. When buying in bulk, identify the minimum threshold so you know when to resupply. You must also have ample storage area and a sorting system for your materials.
Standardising the materials you use ensures a more efficient process since your team will be working with pieces that are more or less of the same quality. Efficient work also implies less material waste, as the workers will be well-adjusted to working with standardised materials.
Have a healthy working relationship with your suppliers, whether they’re material vendors or plant hire companies. Being pleasant with dealings and striving to be the best client gives you a better chance of renegotiating contract terms. You might even get a bumper discount deal out of a healthy client-supplier relationship.
A common issue that many contractors face is learning how to save money on materials without harming the quality of the end product. Cutting down costs while maintaining quality is possible, as long as you look for simpler ways to acquire necessary materials and plan for the long run.
