The construction industry is slowly recovering from the hit that it took during the 2008 recession, but it faces a new challenge. Commonly used construction materials are becoming more expensive. Between 2016 and 2017, the cost of materials increased by 7.4%. What can you do to help offset the rising costs of construction?
Why Are Construction Costs Rising?
Why are the costs of construction materials climbing slowly skyward? This is a two-fold problem. The first issue is increasing energy and crude oil costs. Simply put, it’s costing more to manufacture these necessary components from base materials and those costs are passed along to the construction company. Crude oil, which is one of the main components of road asphalt, saw its price rise 12% in 2017, ending up costing more than $50 a barrel. Consumers will see these costs in rising gas prices, but for construction professionals, the costs are more immediate.
The second issue involves the Trump Tariffs. President Trump enacted new tariffs on any steel and aluminum imports into the country from anywhere except our allies Canada and Mexico. Construction companies utilizing imported steel can expect an extra 25% in costs. Imported aluminum will cost an extra 10%. How can company owners and supervisors offset these rising construction costs?
Modular Construction
Modular construction is a growing trend in the construction industry. Instead of building everything on-site, this gives you the option to create some material in a factory, then ship it to the site and assemble it. It speeds production by up to 50%, helps reduce costs by decreasing labor needs and subcontractors, and prevents material loss due to theft and inclement weather.
You don’t have to worry about rain ruining your concrete pour when you build all of your slabs inside a factory. Then all you need to do is take them to your job site and assemble them.
Pre-Stressed Concrete
Traditional cast-in-place concrete has been the foundation — sometimes literally — for the construction industry for decades, but it has its downsides. Hidden air bubbles, weight and time, can compromise the structural integrity of the structure, leading to cracks and eventually structural failure.
Pre-stressed concrete is a type of modular construction that pours concrete slabs in a factory that are then ready to install. Instead of using pre-placed steel rebar, this concrete is poured with stretched steel within the slab frames that doesn’t sink to the bottom of the slab.
These slabs are also vibrated as they’re poured, to shake out any air bubbles that might make their way in during the pouring process. This prevents cracks and eventual failure that can happen with traditionally poured concrete.
Alternative Building Materials
Concrete isn’t the only option for construction. As the green construction movement continues to gain momentum, construction companies seek out new ways to reduce costs and shrink their carbon footprint. The two are not mutually exclusive. Alternative building materials emerge all the time. Bamboo corrugated sheets are both environmentally friendly and less expensive than plastic, zinc or asbestos roofing panels. It grows faster than oak or other woods used for construction but provides the same sort of durability.
Rice husks are removed from brown rice to make the white rice we know and love. Instead of sending it to the landfill, enterprising construction entrepreneurs started using the ash from burning these husks as an admixture for concrete. It helps to create concrete protected from acidic environments and acid rain because the calcium hydroxide in the husk ash contains naturally resistant materials.
Lean Construction
Lean manufacturing practices date back to World War II when Toyota implemented them for the first time. The core of these principles improves productivity by reducing waste and increasing efficiency. It’s seen use in the manufacturing industry for decades, but it wasn’t until the early 1990s that these lean principles made their way into construction.
Lean construction defines as “a way to design production systems to minimize waste of materials, time and effort in order to generate the maximum possible amount of value.” In today’s world, where the cost of materials creeps slowly skyward, lean construction becomes an imperative rather than an option.
Implementing lean construction isn’t easy, but it can help save you money in the long run. Start by understanding the waste you generate. We’re talking more than waste in terms of materials. Labor costs, wasted time and inefficient practices all cut into your bottom line, making it harder to maintain your project budget.
Once you understand the source of the waste, you can make changes to reduce its impact. Instead of over-ordering for a project and ending up with a lot of extra material, you can work toward ordering the exact amount of material you need for a project. Efficient work practices reduce wasted time and unnecessary payroll hours.
Lean construction requires flexibility — plans sometimes fall through, especially in the early days of implementation.
Field & Fleet Management Software
A lot of experienced waste could often fall on workers waiting for orders or materials. While sometimes unavoidable, if you implement a comprehensive field management software program, you can streamline this communication process to reduce wasted time. These programs are user-friendly, easy to install and give project supervisors the tools they need to streamline their daily operations.
Field management software also handles feedback from field workers, while keeping everything documented in a digital format, so it’s easy to access any data from any date during the project. In addition to monitoring materials, it’s important for contractors to track their equipment as well.
Keeping track of all equipment on a worksite is important, not only for preventing theft with asset tracking, but for making sure each vehicle runs efficiently. The internet of things provides new data for fleet management to provide data for preventative maintenance which allows construction business owners a way to save money on operating and maintenance costs. Combining this with the data it provides, will show owners where they can further optimize operations.
If you haven’t made the transition to digital tools, this might seem like an enormous leap. However, if you can reduce wasted time by streamlining your production process with field management software and fleet management software, you can save yourself costs in the long run — money you can use to offset the rising costs of materials and heavy equipment.
Patience and Perseverance
Counteract rising costs by implementing these tools to help offset materials costs. Maintain them once the market stabilizes to help increase profit margins, and avoid spending more than necessary on the building supplies you need.
Seek out patience and perseverance. The market for construction materials will always shift, and right now there’s no way to tell how it will look in five or ten years.