Contractors struggling to control costs aren't getting much help on the materials front. Persistent overseas demand coupled with a rocky and slow-to-recover economy has turned many, if not most, materials purchases into key business decisions. As this struggle continues, here are four ways to better manage your materials expenses:
1. Renegotiate with your vendors. Sometimes the quickest and easiest way to get a price break is to ask for one. Specifically, try to establish firm, reasonable materials prices with your suppliers for a set period.
Another move to consider, if your cash flow allows, is to buy in bulk. Doing so can be a great way to lock in discounts. And though it may not earn you a price break, try to place your orders as early as possible. This can enhance your vendor relationship and may lead to cost savings down the road.
2. Reuse and recycle. You've probably heard a lot about going green for environmental reasons, but here's another one. Many job site materials can be recycled (wood, metal and cardboard, for instance). You may even be able to boost your cash flow by selling some of it, such as scrap metal.
Review some of your typical projects to see how recycling and reusing materials may work for you. Also, contact your local waste management agencies and area waste haulers to see what opportunities may be available.
3. Learn about and promote value engineering. Sometimes to lower materials costs, you must go on the offensive and become an educator. If owners are demanding materials that are driving up everyone's costs, maybe it's time you promoted an alternative concept known as value engineering.
This concept assesses the function of each project area and tailors materials choices appropriately. For instance, in low traffic areas of a building, less-expensive light fixtures and flooring could shave valuable dollars off your costs.
4. Consider stockpiling. The concept of stockpiling materials when you may be struggling to find the cash to buy anything may seem counterintuitive. But if you've got the opportunity (perhaps a vendor offers you a great deal on a bulk purchase), the dollars and the storage space, this is an option to consider.
It's unlikely that the international market for materials is going to evaporate overnight. Big countries such as China and India, as well as smaller ones such as Dubai, will probably continue to build on a large scale, keeping the worldwide demand for construction materials high and lowering supply. So making the ambitious move to stockpile materials now could benefit you in the long run.
