How to Control Construction Business Costs
Business costs in construction are creeping up everywhere, be it staff, materials, or overheads. Tender price inflation is up at 2-4% for buildings and 4-6% for infrastructure. When margins are tight, waste and inefficiency can kill your profits.
Construction projects are under more pressure from skills gaps and high turnover, as well as supply-chain hold-ups. So how do you push back and control costs without hurting quality and safety? We’ve got some answers that can help.
Get Planning Right from Day One
A lot of waste on a construction project happens before the first brick is even laid. If designs aren’t finalised or if the site isn’t properly surveyed, it can cause problems further down the line. When errors crop up during the build, it usually means rework. This can swallow up to 10-25% of total construction project spend, which is a staggering figure. With margins sitting at roughly 4% those mistakes can be the difference between profit and loss.
Proper planning means getting all the key players together early on.
Designers, engineers, and subcontractors have all got ot be aligned before anyone starts working on the site. Using digital tools like Building Information Modelling (BIM) is a good way to spot errors in advance, which makes it far easier to fix them before they spiral into expensive business costs.
Dedicate Time to Getting an Accurate Cost & Supply Chain Forecast
Material prices have been very volatile of late, as has the construction supply chain. This can blow a project finance plan out of the water if you’re not fully ready. One of the best ways to stay ahead is to lock in prices with suppliers wherever you can. Bulk orders and long-term agreements can often come with better rates, and you can also benefit from more certainty.
Reviewing your procurement strategy is a smart move.
Flexible contract terms like business cost escalation clauses can help to protect you if there’s a sudden price change. You can also manage risks by keeping alternative suppliers or materials in mind, rather than putting all of your eggs in one basket. Engineered timber or recycled products, for example, can sometimes make good replacements for more expensive options like steel or concrete.
Invest in Staff Training
Getting a grip on your long-term costs means building skills within your team. There’s a huge skills gap in the construction sector at the moment, and without investment in staff training, this isn’t going to improve. Upskilling your team is a smart move, so providing opportunities like apprenticeships, mentoring, and professional development schemes is the way to go. Make sure it’s relevant to the modern construction industry, too, with aspects like digital tools and sustainable methods.
Use Technology to Work Smarter
New construction tech saves time and reduces mistakes, while also cutting your business costs. BIM, which we’ve already touched on, is a great example of this, but it’s not the only one. Construction project management tools can handle tasks like invoicing, progress tracking and timesheets in one place, which massively cuts down on your admin burden.
Stats show us that digitising these processes can save about 30% of your working time. That’s the time you can redeploy on-site, delivering your construction projects faster and with fewer errors. Drones for site surveys and telematics for fuel use are also good options for reducing business costs.
Manage the Scale and Skillset of Your Team
Labour is one of the biggest expenses on any job, and you’ve got to strike the right balance in terms of the size and capacity of your workforce. Using flexible staffing options can give you a safety valve when deadlines are tight. Construction recruitment experts can provide skilled tradespeople at short notice to cover gaps and keep the job moving.
That said, it’s really crucial to keep a core of well-trained staff. A team that knows your way of working and your specific sector will always deliver better quality and help avoid delays. The key is the flexibility to scale up when demand spikes and scale back when it quietens down without dragging up your business costs.
Retain Your Best People
Keeping hold of a core of experienced, dedicated construction staff isn’t easy, but it makes a huge difference when you pull it off. High turnover can be a big business cost and causes major disruption to construction projects on-site. When seasoned staff walk away, knowledge goes with them, and you may well see more errors on jobs.
A good way to manage this is by working with a construction recruiter who values long-term placements. It’s something we’re really passionate about, and our aim is always to find the right fit for your company, which means culture, skill set, ambitions, and personality. It’s much more cost-effective to invest in one team member this way than have the unrest and expense of constantly seeking replacements.
Aim for Right First Time
Mistakes cost money, and building a culture that values quality and gets things right the first time is one of the biggest cost savers available. This is about more than just checks and inspections. It is about training staff, encouraging them to flag problems and learning lessons from the past. Lean construction principles and continuous improvement processes help, too. When fewer errors creep in, you spend less time and money fixing them. That keeps a construction project on track and makes project finance far easier to control.
Looking for Skilled People to Drive Your Next Construction Project?
At ITS Construction, we aim to deliver specialist recruitment services across the UK building industry, helping contractors find the right people to get projects done on time and on budget. With our expertise in skilled trades, white-collar roles and labour hire, we work with you to understand the pressures firms face in managing your business costs.
View our full range of specialisms here or get in touch with the team today to see how we can support your next construction project.
FAQs
How can firms make project finance more predictable?
One way is to use staged payments and milestone tracking with clients. This spreads the risk and gives you better cash flow through the build.
Are there government schemes that help with staff training?
The UK still offers apprenticeship funding and CITB grants, but there are also local training partnerships and short-course subsidies in certain regions.
Is it worth smaller firms investing in new technology?
Low-cost digital tools like mobile reporting apps or cloud storage can improve communication and cut admin time. For smaller businesses, those gains are just as valuable as bigger innovations.
