Reducing Construction Overhead and Fixed Expenses

In the construction industry, effectively managing and lowering fixed overhead costs may seem impossible, but incredibly, there are many new technologies and software solutions available, designed to accomplish that very thing.

The fixed costs associated with construction, generally consist of administrative, facilities, and equipment maintenance expenses, and although proper insurance compliance and labor costs are incessant, the actual cost is variable, and affected by annual revenue and specific activities performed per project.

Therefore, developing a strategy that offers a significant impact for decreasing the fixed costs of an operation can provide construction industry professionals and businesses with a distinct advantage when vying for contracts in this highly competitive field.

Administrative

Streamlining the activities of office personnel and administrative hours is an excellent way to reduce fixed overhead costs in the construction industry. Certain tasks such as, filing previous project information, maintaining accurate worker’s compensation and weekly payroll data, and tracking job expenditures can be assisted and curtailed by utilizing specialized software programs, designed for contractors.

Innovative technology is available for construction industry professionals, which offers superior data management. In an easy to access and use format, these software programs effortlessly assign field site information to its appropriate job number, including the hourly breakdown of labor needed for the proper classification of worker’s compensation codes and emergency material purchases, and simplify pick ticket and other vital paperwork submissions.

Facility and Equipment Maintenance

The monthly expenses generated in the office maintenance, such as rent and utilities comprise a certain percentage of each project, and contribute to overhead expenses.

Equipment maintenance is essential to the success of any business operating in the construction industry, especially considering that the equipment represents a significant portion of company assets. From small power tools to large machinery such as concrete pumps, excavation equipment, or fleet trucks, ensuring that these items are in good condition and work properly, requires monitoring maintenance schedules.

Factoring these cost into each job, and tracking maintenance schedules with specific software can lower overhead by ensuring that the tools needed for each project are working properly, and that when a replacement is required, resources are available for the purchase.

Recent technological advancements have altered the methods businesses in the construction industry use to organize operations. Software solutions, so effective in other industries, have been specifically adapted to furnish construction professionals with the methods to implement best practices, streamline communications, and improve efficiency, generating higher profits. Want more construction industry tips? Watch our 30 minute Construction On-Demand Webinar on Financial Forecasting.
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