How To Navigate Increased Construction Material and Labour Costs in 2024
It’s undeniable that the cost of materials and labour in construction are increasing, with material costs rising by 43% in two years and labour costs being up 10%, according to Knight Frank data from 2023. With inflation only increasing, this will likely continue to rise in 2024. However, you don’t need to sit back and accept that your construction business is going to make less money, as we have solutions to help you reduce the costs of your materials and labour. With some careful planning, you can save a significant amount of money!
photo by Rodolfo Quiros
Material
Use A Structured Budgeting Software
First up, one of the best things you can do to save money in terms of your materials is to use structured budgeting software. Usually, a spreadsheet doesn’t quite cut it, especially when there are lots of different moving parts. There are plenty of different great software out there to help you budget properly, with Archdesk being a particularly good one, It has a great dashboard for a quick overview, it helps you to forecast costs to create an accurate budget, and you can easily track budgets, then there are great reporting features too.
Whilst it may take some time to move over to a new budgeting software, not only will it make your life much easier, but it can help you to more accurately plan what you’re planning on spending vs what you’re actually spending, to save money on specific projects and learn important lessons for future projects too. This is such an important step to help you properly manage your construction project.
Utilise Material Price Comparison
If you’ve not compared the prices of your materials recently, we’d highly recommend using a material price comparison website. You may have your go-to suppliers when it comes to your materials, however through inflation, some companies will raise their costs whilst others remain stable without you realising. So, take an hour to go to a material price comparison website and just check that the place you buy from is still the cheapest supplier of the specific materials you’re looking for.
As well as searching for a specific product and finding the cheapest supplier, you can also search for a general product and look at the different manufacturers and choose a cheaper option that way, too. Of course, don’t go for the cheapest for the sake of it, it’s vital that you maintain the quality of your business as well as balancing reducing costs.
Minimise Waste
Something else you can do to cut your material costs as a construction business is to minimise waste. You’re literally throwing money away when there is a lot of waste, and although some waste is unavoidable, putting some focus on how much you’re wasting and how you can reduce it is important. Make sure that you’re properly storing your construction materials to avoid any damage which renders the material unusable and ensure you’re ordering the right amounts of materials. Although we know it’s tempting, especially when you’ve been in the business a while, when you’re mixing things like concrete, don’t do it by eye, make sure you’re measuring properly for the space you need. Take some extra time to get those CAD details right to ensure you’re only ordering and using what you need. These small things can add up to make a big difference to your outgoings.
Labour
Schedule Properly To Avoid Overtime Costs
Now moving onto labour, we’d highly recommend that you schedule properly to avoid overtime costs wherever possible. Of course, projects run over sometimes, however if it’s regularly happening, this suggests that you need to map out the projects in more detail and perhaps be more stringent with your team of labourers. If long breaks and hours of chatting are common, that’s money wasted. So, although you want your team to be having fun and there to be a good atmosphere, make sure to put a schedule in place for the project so everyone knows what they’re working towards. This could potentially save you hundreds if not thousands of pounds per project by not paying for those extra days of labour.
Remind Yourself Cheaper Isn’t Always Best
Whilst it can be tempting to save money on labour costs by hiring less experienced team members or people with lower hourly rates, remind yourself that cheaper isn’t always best. The last thing you want is for people to make consistent and avoidable mistakes, that will affect the quality of the work and therefore reduce the chance of word of mouth recommendations, or you may receive poor reviews online. Also, if you’re having to use more time and materials to make up for the mistakes that have been made, then this is also more money out of your pocket. So, overall, whilst you will have some less experienced people working for you, as every business does, don’t neglect hiring the more experienced people that you can rely on to save a bit of money, as it will likely come back to haunt you.
Know When To Use Plant Hire
Something else that can reduce your labour costs is to make sure you know when to use plant hire. When working on bigger projects that require bigger machinery, like dumper hire, the quality of the machinery can make all the difference. So, rather than choosing a cheaper option, where sometimes you’ll need to go and collect the equipment and waste more labour time, it may be worth choosing a company that is a bit more expensive, but delivers straight to site and offers the best quality equipment the industry has to offer. You will benefit massively from the efficiency of better quality machines, getting jobs done quicker and requiring less people more often than not. For example, rather than needing to pay two labourers to lug around a really heavy piece of machinery, when you choose a good plant hire company, the machinery will be built with operator ease in mind, so you can pay one person instead. It goes without saying that machinery doesn’t completely replace the need for labour, and you should never put your staff in a position where they could be injured or overworked, however being a bit more savvy by getting better equipment can help you save money and improve the quality of your work.
Author : Amy Jones
Cover image by Photo by Pixabay
