Due to unforeseen circumstances, it’s hard to maintain your project under budget. There are times when the tasks, labour, and equipment needed for the project costs more than the quote given. If you want to avoid that situation, consider these five ways to reduce construction costs:
Live by the 80-20 rule
The Pareto Principle or the 80-20 rule states that 80% of the outcome must come from 20% of the input. Therefore, you must shell at most 20% of the budget to complete at most 80% of the things you need for the project. Start with identifying the large tasks within the entire project. In a regular residential construction, this includes construction of the external wall, roof, concrete foundation, and cabinetry. Nail the cost of these things at 20% of the budget. The rest will be used to enhance the interiors, landscape, and exterior design.
“The 80-20 rule is a practical principle that you can apply to your everyday life, in business, and at work.”
Control your variable costs
Variable costs are elements that change its value throughout the course of the project. This includes the hourly labour rates, equipment rental, and excavation fees. This is opposed to fixed costs or the items that never change their price.
To reduce construction costs, identify all the variable costs in your project before putting them out for tendering. You need to control these or else it’ll blow your budget. Put them on a strict schedule in your project’s timeline, as much as possible. If you don’t have means to control these things, we recommend that you look for fixed costs counterparts. Create a deal with the tradies and suppliers when needed.
Prepare an extra budget for excavation costs
Excavation fees are considered as variable costs so prepare for the unexpected. It is included in the tender documents as a provisional sum, meaning it’s only the cost consultant’s estimation and the accurate price is yet to be defined. Some builders will ask you to pay a higher provisional sum for excavation costs because they want to include the contingency budget early. Of course, you can confirm this from the builders.
Look for alternative building products
Ask your supplier about the more cost-efficient alternatives to the building products you’re about to use.
For instance, prefabricated frames might be a better option compared to stick frames. Prefab frames are more expensive, but you will save more time and money on labour.
Also, metal roofing might be better than concrete roof tiles. It’s low maintenance, light, and involves less trusses.
Explore alternative building methods where you can reduce construction costs. Do your research and get a quote for each one so you can compare your options more completely.
Create a project plan
The most effective way to reduce construction costs is to manage your finances. Start with a detailed project plan. You can write everything down on paper or use a software that can help you organise the project. Yes, it’s additional work but this will help you foresee problems in the future.
Now that you have an idea how to do it, it’s time to take action. Remember the pointers we mentioned above as it can reduce your construction costs and keep your project within the budget.