With bankruptcy as common as it is in the construction industry, construction companies need to use every trick in the book to ensure that they turn a profit on their projects. In this article, a Houston construction lawyer with Cotney Law discusses five common sense ways you can improve your bottom line. Taken at face value, these tips may seem like little more than picking up a penny from off the street. However, it’s not uncommon for contractors to take a closer look at their operations only to discover that they have been hemorrhaging tens of thousands of dollars. For an experienced expert that can safeguard your company from threats to its bottom line, partner with the Houston construction lawyers from Cotney Law.
1. Manage Your Inventory
Your company can’t afford to make mistakes when it comes to managing inventory, especially as the cost of materials continues to rise. It’s no secret that the current trade war is taking its toll on construction companies across the nation. The problem is that while material costs account for only a fraction of a project’s total value, they have an incredible impact on virtually every aspect of the project.
For example, when materials become scarce on a project site, it leaves crews with little to do, which only further drives up the cost of labor and the project as a whole. Properly managing your inventory is a surefire way to combat rising material costs and improve your bottom line. We recommend investing in construction management software that can not only track orders and costs but also take the guesswork out of numerous other aspects of your operations.
2. Invest in Your Workforce
The hard truth is that the construction industry as a whole is facing a massive labor shortage. If you don’t take steps to ensure that your crew members are satisfied in their positions and rewarded for their efforts, another employer will. When you lose workers, you’re not only losing a skilled worker to a competitor but facing the challenging prospect of replacing them. By investing in your workforce, you’re investing in your projects and ensuring that they finish on time and under budget.
You may be thinking that a bonus or increase in pay is enough, but that may not be the case. Time and again, it’s been shown that higher wages alone are not enough to attract millennials to the industry. We recommend an attractive paid time off (PTO) policy to ensure that your workers feel appreciated, spend needed time with friends and family, and are refreshed when they step back onto the project site. The added bonus is that a well-rested workforce will be more efficient, less prone to errors, and less likely to succumb to injury.
3. Be Present on Site in Some Form
Considering that labor, not materials, is the main cause of rising construction costs, your workers should be expected to work when they aren’t enjoying PTO. First, ensure that you aren’t wasting a skilled laborer’s time on a menial task. Second, ensure that your workers aren’t skipping out on their duties. For example, a surprisingly costly problem in the construction industry is the prevalence of smoking. A report published by Emerald Group found that, on average, construction workers waste about 73 minutes a shift on smoke breaks, accounting for a 15.2 percent loss in productivity.
Of course, there are delays that are beyond your workers’ control. Due to the number of subcontractors and sub-subcontractors that come and go on a construction project, it’s not uncommon for work to stall as everyone higher up in the job hierarchy waits for a smaller project to be completed before they can move in. Even if you aren’t present in the field, be sure that you have trustworthy managers in place to track your workers and ensure that everything is running smoothly.
4. Measure Twice, Cut Once
With projects commonly being awarded to the lowest bidder, it’s all too common for a construction company to submit a low bid and commit themselves to a mammoth undertaking that will be next to impossible to profit off of. In order to avoid this dilemma, your company must make accurate estimates before commencing work.
Remember, you can always track how well your company does, even on projects where the scope of work is difficult to define. In order to make accurate estimates, it is imperative that you take what you’ve learned across all projects and apply them to your current ones. You can do this by conducting a post-mortem meeting with your team after every project to spotlight cost-saving solutions and issues that caused you to go over budget. And we can’t recommend this enough; hire a Houston construction lawyer to draft and review your contracts to ensure that the scope of work is clearly defined. Otherwise, you could be setting yourself up for failure.
5. Partner With a Houston Construction lawyer
Throughout this article, we’ve discussed rising material costs, labor shortages, loss of productivity, and inaccurate estimates. What do all these issues have in common? They inevitably lead to delays and legal disputes. When that happens, you’ll find your bottom line shrinking as the possibility of reaching substantial completion on time and under budget diminishes. When you inevitably face a legal dispute in the construction industry, turn to a Houston contractor attorney from Cotney Law.
At Cotney Law, our team of attorneys is dedicated to helping construction companies in all aspects of construction litigation, including contract disputes and payment disputes. If you’re looking for a common sense way to improve your bottom line, partner with the attorneys who will dedicate themselves to protecting you, your workers, and your business. Partner with the Houston contractor attorneys from Cotney Law.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.