October 10, 2019

Control job costs with smarter materials management

Managing project costs can get tricky — especially in today’s construction materials marketplace. Materials represent a major budget item, and their overall cost has been rising since 2017, thanks largely to trade tariffs enacted in 2018.

This year, the prices of many individual materials have become unpredictable because of ongoing trade conflicts (tempered somewhat by decreasing oil prices). Consequently, it’s increasingly important for contractors to pay closer attention to smarter materials management.

Ideas for best results

The goal of materials management is to ensure that the correct quantity and quality of materials are procured at the lowest possible prices and available when and where needed. Overordering results in waste and cost overruns while underordering leads to delays and could cause higher costs if you must scramble to get needed materials. Here are some ideas on how to get the best results:

Shop around to improve cash flow. If you’re less than thrilled with your current suppliers, let them know you’re shopping around to encourage them to pitch a better deal. Also, review your financing. Although no one likes paying interest, creating longer payment terms by assuming new debt can be helpful if done right.

Exercise sound preconstruction. Planning and communication are key to efficient materials management. Therefore, preconstruction plays a big role. Establish realistic costs and timelines with subcontractors ahead of time, and work with suppliers and distributors to place orders and confirm delivery schedules so materials arrive on time and at the correct locations.

Order early. Speaking of deliveries, many contractors collect and submit orders daily for miscellaneous items needed the next day. But they risk work delays if those items aren’t delivered before the workday begins. It may be better to schedule deliveries so materials arrive the day before they’re required.

But don’t order too early!To decrease waste during construction, make sure materials don’t arrive prematurely. When items are stored until a later construction phase, they’re at risk of deterioration, damage or theft. If this has been a common problem, investigate why.

Consider “kitting.” Many suppliers/distributors now offer customized product kits containing just what’s needed for a room, floor or other construction area. Check with your supplier to see whether kitting would be cost-effective, reduce waste, enhance efficiency and increase productivity.

Leverage tracking technology. The larger the job, the more complicated keeping tabs on assets becomes — and the more time is wasted hunting down items. Automated systems with bar codes, QR codes or radio-frequency identification tags can significantly reduce the time spent locating and moving materials and equipment.

Drones, remote-access cameras and onboard vehicle GPS systems also may give your materials management the security it needs. As an added safeguard, construction management software typically offers contractors the ability to notate on drawings the exact location of materials delivered to the jobsite.

Noticeable differences

Many construction companies get in the habit of handling materials a certain way and not deviating from those methods. If your tried-and-true approaches are working, don’t feel like you must rock the boat. But slight improvements to your materials management can make noticeable differences in cutting costs and creating a healthier bottom line.

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