Reducing Costs for Your Construction Business

It is a challenging time to run a business in the UK, regardless of industry. Market prices are tumbling as a result of recession fears, while the factors that sparked such fears are causing business costs to increase across the board. The construction industry is a pillar of the UK’s infrastructure and is being hit particularly hard by market instability and rising costs. But what can be done to bring costs down, and make running your construction business viable in difficult economic times? 

Optimising Salaries

Salaries and other labour costs are the single biggest expenditure in construction businesses, whether smaller contractor outfits or larger conglomerates. The already-high percentage of business expenditure attributed to labour has been exacerbated by a shortage of skilled workers in the industry, which has led to a sympathetic rise in labour costs – even reaching an all-time high in London.

So, how best can you approach reducing your business’ expenditure on salaries and contractor fees? It is an understandably difficult area to attempt to address, especially when redundancies and downsizing can seem like the only option. Thankfully, you can reduce costs over time without getting rid of your staff. 

Instead, you could look to optimising your internal structure, making room for more skilled workers who can pick up slack and save you money. You could also ramp up your internal training program, allowing you to upskill your entry-level staff and reduce employee churn rates. Stabilising staff turnover and improving the quality of work are key to cutting your future labour costs, especially those attributed to training up new workers. 

Addressing Material Costs

The next biggest cost related to running a successful construction business lies in the procurement of building materials. This is another cost that has been inflated recently, posing more of a risk to profitability; the cost of timber has risen significantly in the last few years, with prices jumping by nearly a quarter within one month in 2021. Reducing costs on supplies is more complicated than simply cutting down on how much is purchased; materials are often bought on a project-by-project basis, making buying less materials impracticable. 

Factors you can alter, however, include your suppliers and the kinds of materials you buy. With regard to the latter, economic decisions can be made in certain circumstances; for example, plywood is a more cost-effective choice than hardwood for sheetwork, whether structural or non-structural. With regard to the latter, new suppliers may be more amenable to offering you a welcome discount, or a better deal on certain bulk purchases. 

Cutting Equipment Costs

Tools and equipment are central to the effective completion of construction projects, from simple bricklaying to complicated structural engineering. Buying new equipment can represent a serious outlay in the event of breakage or failure. A more economically sensible strategy is to ensure the upkeep and safe use of your existing equipment. For businesses using more complicated machinery, retaining an in-house engineer to carry out repairs and maintenance can save significant sums in new equipment and emergency callouts.