2021 has seen an unprecedented rise in construction material costs and other business costs. Labor shortages, supply chain delays and high materials costs drive prices higher and higher. Unfortunately, the construction industry already struggles with cash flow and tight business margins. Added costs and other delays add greater difficulty to an already challenging business model.
As a contractor or company owner, you might be asking yourself: what can I do?
Mitigating Rising Construction Material Costs
Unfortunately, most of these three causes are out of your control. Supply chain delays, labor shortages and the rising cost of construction materials are not things you can typically change. However, there are several factors within your business that you can control to help stabilize cash flow.
Avoid Costly Project Design Errors
Right out of the gate, if you do not have an air-tight blueprint or project design, you’re already in trouble. According to Autodesk, errors in design accounted for 38% of construction disputes. This means that the whole project is thrown into disarray until the contractors, project designers, and owners come to an agreement. Frequently, this can result in substandard work. Even worse, it delays project completion if other tasks rely on the issue in question.
Using design software like Autodesk BIM Collaborate can help reduce conflicts. Ultimately, using design software that is also geared for communication and collaboration cuts down time sent arguing over changes and clashes. By investing in construction design software, you can make more informed decisions. In other words, you can much more accurately budget for resources at the start. As a result, you can combat rising construction material costs by ensuring you don’t over-buy or under-purchase.
Empower Your Teams
What happens on-site can make or break a project. You could have the best project management or design in the world. But if you have the wrong team, or don’t give them modern tools to make their jobs easier, a project could quickly fall behind. Labor shortages and rising construction materials costs add extra pressure on subcontractors and general contractors. Having less workers and added costs already jeopardize traditional job timelines.
Rather than adding to the stress, provide your teams with tools that expedite other parts of the job process. For example, Raken offers software that makes daily reports quick and easy. Additionally, it helps track things like tasks and timecards, ensuring that daily activity on-site can be easily reported all from the convenience of employee’s phones.
When you reduce time spent on expected, routine tasks, you give workers time to deal with the unexpected. In this way, you can help cut down on over-time or projects that run over their expected timeframe.
Ensure Project Organization
In the same way, modernizing your project management can significantly reduce problems. Whether you use robust software like Procore or if you have a more specialized solution, you can reduce much frustration and errors. For example, Procore handles almost all aspects of construction project management. Most importantly, it is specialized just for the construction industry. Ensuring that you use tools that meet your needs, rather than relying on old or outdated methods can revolutionize the way you communicate and organize your company’s workload.
Project management software can cut down the work of your office staff. Additionally, advanced analytics can help all members of the team understand what is happening on each project. They won’t have to constantly email or call off-site employees or workers to figure out progress. They may catch problems before they happen, or at least be able to analyze what went wrong retroactively. With more accurate project management, organizers can account for construction material costs more accurately.
Streamline Your Billing Process
Finally, it is important to review the process by which you pay and get paid. The construction industry is notorious for delayed payments. Reasons for pay delays frequently revolve around error and communication gaps. When already struggling with material costs, a delayed payout can cripple not just a project but an entire company. Rather than spend many hours emailing back and forth, trying to locate important documentation and fix problems, you can invest in construction billing software.
For example, our billing solution, Flashtract, covers almost the entire billing process. We help organize everything from lien waivers to change orders. Documents are generated, stored and sent to relevant parties all from the app. By saving your teams’ time with standardized billing practices, you remove cash flow throttles that already plagued the industry.
Prepping for Rises in Construction Materials Cost
While you can’t personally fix the global issues that are causing massive materials cost rises, you can help your business tackle their impact. By removing existing issues and saving your teams time, you can mitigate other business costs. Finally, you’re also putting your best foot forward when the market inevitably changes. Rather than cut corners or stress over these unforeseen circumstances, you can provide your business with the efficient tools it needs to overcome future problems as well.
Are you ready to see how Flashtract can help you with cash flow and organizing your billing process? Schedule a demo today.