7 Tips For Construction Startups To Save Money And Time
by Abdul Aziz Mondal Startups 08 May 2023
Building a construction startup is no easy task. It takes years of preparation and hard work to get off the ground, but much more work will still be done once you do. This is because the construction sector is fiercely competitive. According to TechCrunch, the construction sector is a huge $1.3 trillion industry in the United States today.
One of the best ways to get successful in this sector is to save time and money. To get your business off the ground while maximizing efficiency, your startup must optimize every aspect of its operations, from hiring employees to building processes and beyond.
To help you out, here’s a compiled list of some ways that construction startups can optimize their spending:
Analyze Your Costs And Expenses
To save money, you need to understand where you are spending it. That’s why analyzing costs and expenses becomes crucial here.
- Analyze your costs and expenses: To understand where you’re spending money, it’s essential to know what kind of business you’re running. This includes understanding your sales and revenue and the costs of producing those products or services. Salaries remain a massive portion of the business expenses, with project managers being paid $89,639 per year
- Understand your COGS (Cost of Goods Sold): A construction startup can’t sell anything if it has no products or services to offer its customers. Understanding how much each product or service costs is crucial when determining whether or not a startup will be profitable in the long run.
- Determine gross profit margin: Gross profit margin measures how much money was made from selling each item after subtracting all expenses related to producing the items. For example, if an electrician charges $100 per hour for labor at his company but spends $50 per hour purchasing tools needed for his job site workstation, he has a gross profit margin of 50%.
Use Rental Equipment
Renting equipment can be a cost-effective alternative to buying it. Renting could be a good option if you’re working on a project requiring heavy machinery. It’s also ideal for equipment you only need for a short time. For example, if you’re doing construction work in an area with no power lines or water pipes yet and need to bring in portable generators and water pumps.
Renting is ideal if several teams need the same equipment throughout several projects. This will save money overall by reducing costs associated with purchasing new tools whenever needed.
Whatever you need, there are many rental companies offering construction equipment to choose from. For instance, cranes are expensive yet essential equipment required in many construction projects. In such cases, you can look for a crane rental company and get a crane on rent to save the upfront cost of buying one.
When selecting a crane rental services provider, ensure hiring someone who focuses on safety. According to data from the U.S. Bureau of Labor Statistics, the construction industry is the most dangerous, accounting for around 21% of the total workplace fatal injuries in 2020. That’s why the focus should be on safety.
Hence, Midwest Crane Services states on its website that only a rental company with a dedication to safety and quality services can become successful. The company also goes on to say that the crane operators should be highly experienced and have at least one certification to ensure safety.
Optimize Your Processes
The next step is to optimize your construction processes, not only the field operations but also the backend work. Here are some ways you can optimize your processes.
- Lean construction techniques: This is a method of optimizing your processes to reduce waste and increase efficiency. It’s based on the idea that there are several types of waste in any process, and you should work to eliminate them as much as possible. This can be done through careful analysis and planning so that you don’t have any surprises when it comes time to build something. According to an NCBI article, 75% of the waste is residual and wasted due to an absence of a proper waste management framework.
- Predictive analytics/data-driven decision-making: You can use data collected from previous projects to predict how long future projects will take based on past experiences. This will allow you better estimate costs before starting any work so that there are no surprises later when things start going awry.
- Technology: Technology such as mobile apps could help make your processes more efficient by allowing workers easier access to their systems while out in the field working away from their desks.
Leverage Lean Construction
Lean construction is a process of eliminating waste in the construction industry. It is based on lean manufacturing principles, which originated in Japan and was popularized by Toyota Motor Corporation. Lean manufacturing focuses on eliminating waste at every production stage by finding ways to improve efficiency and reduce costs.
Lean construction applies these same principles to building projects. Still, instead of focusing on how quickly you can produce something, it focuses on how efficiently your team can work together to deliver value to customers. This means that instead of trying to get things done as quickly as possible without regard for quality or safety, you’ll want your team members working together towards common goals.
Use Technology To Your Advantage
Technology can be your friend when it comes to saving time and money. Here are some ways that technology can help your construction startup:
- Collaboration: Communication is critical in any business, but it’s vital when working with a team. Use an online project management tool like Basecamp or Trello to keep everyone on the same page. This will allow you to stay organized while informing everyone about what’s happening in real time.
- Communication: Emailing documents back and forth between coworkers wastes valuable time, and nobody wants their inbox overflowing with emails from coworkers. Instead of emailing files back and forth between coworkers who need access, try using Dropbox. This will allow them access without clogging up their inboxes and yours.
- Data Sharing: If there’s one thing every startup needs more than anything else, it’s data, and access to all analytics tools can help cut costs by optimizing processes. Hence, they run more efficiently than ever before.
Prefabrication Can Optimize Spending
Prefabrication is a great way to save money and time in the long run. It can also help you optimize your spending by reducing waste, improving quality control, and making transport easier.
One of the best things about prefabrication is that it saves time and money on construction projects. Prefabricated units are built in the factory. They’re assembled from components already cut to size, allowing them to be transported easily from one location to another without being broken down into smaller pieces first.
Use Data And Analytics To Make Informed Decisions
In construction, data can help you better use resources and save time on projects by identifying inefficiencies early on. For example, if one contractor is consistently getting done faster than others in your area, you could hire them for future jobs instead of trying out new contractors each time you need something done quickly.
Similarly, analytics can help identify problems with current procedures so that they can be fixed before they become serious issues and save money by avoiding costly fixes later.
It’s easy to get caught up in the day-to-day operations of your construction business, but it’s important to keep an eye on the future. Entrepreneurs who identify trends early on can take advantage of them before anyone else, which means more money. Following these tips can keep costs down while still providing quality customer service.