Rising costs and shrinking margins are significant financial pressures in the construction industry. It’s essential to understand the sources of cost increases in construction. Some factors that contribute to the rise in costs are:
- Raw materials and commodities: The cost of raw materials such as lumber, steel, and concrete can vary based on factors like supply, demand, weather, and transportation costs.
- Labor costs: The availability of skilled workers, talent competition, and the cost of benefits and insurance all contribute to labor costs.
- Government regulations and compliance: The cost of complying with regulations such as building codes, safety requirements, and environmental regulations can increase the cost of construction.
- Market demand and competition: Fluctuations in demand for construction services can increase prices for materials and labor.
- Equipment and technology: The investment in new equipment and technology may increase costs.
- Environmental factors: Climate change and natural disasters can disrupt supply chains, increase insurance costs, and raise the cost of materials and labor.
- Financing, insurance costs, and interest rates: These can also affect the cost of construction. Buyers may have less money to spend due to rising global interest rates but still expect the same quality delivered for the same price as what was quoted.
What costs can you control and what is out of your hands?
It’s good news that some of the costs related to the process and how you deliver your service are within your control. Streamlining and simplifying the process in each area without taking shortcuts can help you control costs.
Consider evaluating the software tools you are currently using in your business and looking for other opportunities. There may be better software options in the marketplace that could save you money. In addition, new software has been developed with the advent of the pandemic, so there may be options you have yet to consider.
Labor is another cost that is in your hands, but you need to think outside the box. If you’ve only been hiring locally, it may be time to look at the way the world runs globally. You may not need to have all your people locally with different cloud-based software available. You could outsource labor to other countries with lower costs, while keeping physical jobs in-house.
Lowering your costs of lead generation for construction with modern techniques
Lead generation and marketing are crucial for every property development business. A lot of money gets spent on attracting new buyers to purchase new homes and attracting investors who want to invest. How can you control the cost of your marketing? Are you still using expensive old-school marketing methods, such as Google search ads or spending a lot of money on directories like Yellow Pages?
There are modern lead generation methods for the property development and construction industry that can work and produce more buyers and investors at a far lower cost. Marketing a property or a site, whether it’s a block of apartments, a shopping center, house and land packages, or a subdivision, is very expensive. The cost of 3D rendering and getting artistic drawings to show potential buyers and investors about the property is also high. Once again, combining this with what we’ve discussed about the labor market, there may be ways to produce these things in a different location for a far lower cost.
There are a lot of efficiencies that you can control, and a lot of costs you can manage. So, start looking to 2023 rather than thinking about the year 2000. Get with the times and save money in your construction business.
Adopting efficient project management techniques to improve profit margins.
Managing a construction project can be challenging as it involves multiple stages, including finding a suitable site, obtaining drawings and plans, performing feasibility analysis, acquiring the site, liaising with the council, making necessary adjustments to plans, communicating with investors, and selling the property. Streamlining each sector of the construction process can improve efficiency, and software tools like Lucidchart can be helpful in building workflows to identify areas that need improvement.
Once workflows are in place, it’s time to consider adopting software tools to manage contracts, marketing, lead generation, and other areas of the business. Online productivity software is the way of the future, and there are several customizable tools available, including Monday, ClickUp, Asana, Basecamp, and Trello.
These tools can help you link different stages and streamline various processes in your construction business, from sending out contracts to marketing properties.
By using software tools, you can make your construction process more efficient and effective, ultimately leading to improved profit margins.
How can a construction company control the cost of labor and handle shortages in 2023?
Controlling labor costs and addressing labor shortages is crucial for a construction business. Hiring skilled workers locally is becoming increasingly expensive and challenging. One solution is to consider hiring from a different location, such as India, Vietnam, South Africa, or the Philippines, where suitable skilled labor is available at a lower cost. The Philippines, for instance, offers a pool of talented English-speaking workers who have degrees in areas relevant to the construction industry.
To identify which roles can be outsourced to a lower-cost destination, it is essential to review the entire construction process and highlight tasks that can be done remotely, such as property research, feasibility studies, and administration tasks. Compliance officers, product estimators, marketing, and contract administration are just a few examples of positions that can be outsourced to the Philippines or other low-cost areas.
Online communication tools can help facilitate outsourcing tasks and ensure effective communication between team members. By outsourcing, companies can take advantage of cost savings and focus on other critical areas of the business, such as lead generation, marketing, and project management.
Is Your Construction Business Ready to Successfully Outsource in 2023?
If you have gone through this article and improved your workflows, streamlined your software, and built your business in a way that can be run more smoothly, then the answer is yes – you have already created a company that can outsource to the Philippines. Now, all you need to do is focus on process training, make sure these processes are in place, and identify all the areas in your business where you can improve efficiencies, lower costs, and tackle financial pressures in construction.
About The Author
Meet Stephen Atcheler, the Managing Director of a Real Estate Virtual Assistant Company. Stephen has been working in the industry since 2013 and has a wealth of experience in making outsourcing work for real estate businesses. He fell in love with real estate at a young age and has been working in the field since 2005. Stephen’s passion for real estate and helping other business owners thrive led him to start his own real estate business in 2012, and eventually, to establish a real estate virtual assistant company to take it to the next level. Stephen’s wealth of experience and knowledge in real estate and outsourcing make him the perfect person to guide you in setting up your own virtual assistant team. Feel free to reach out to him on Facebook, LinkedIn, Twitter, or Instagram.