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By: Jeson Pitt on April 25th, 2018

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5 Smart Ways Builders Can Reduce Overhead Expenses

Blog Posts | Operating Insights

The overhead costs involved in a construction business are very different from those involved in a business from any other industry. The involvement of independent contractors, labor costs, equipment rentals and frequent location changes make the overhead costs in this business very different from any business in any other industry. These costs form a substantial portion of any estimate of any construction job.

Construction companies can benefit in multiple ways if these costs are reduced considerably. The 5 smart ways mentioned below can help your business successfully reduce the overhead costs of your business for an improved financial bottom line. Take a look:

1. Carry Out a Vehicle Fleet Assessment

Companies with large construction equipment and vehicle fleet should consider analyzing their fuel consumption as this is a great opportunity for the companies to curtail their overhead costs. If the nature of your business also demands a giant fleet, you can start by assessing its quantity. This would give you a fair judgment about the unused vehicles which can be sold off or about replacing old vehicles with their contemporary and more efficient counterparts for optimized fuel consumption. Also, investing in fuel-efficient, hybrid or electric vehicles is a great option against those which use old technology and hence consume more fuel. This switch can make a huge impact on the fuel costs of your vehicle fleet by eliminating extra expenses.

2. Reduce Electrical Materials Expenses

The required electrical materials are best purchased from electrical liquidators as they offer such materials at the most competitive prices in the market. Since the electrical liquidators don’t buy from a single source, they are able to sell electrical materials such as connectors and wires at much cheaper rates with no compromise on quality.

3. Replace Old Technology with Contemporary Options

Usage of old or outdated technology not just negatively impacts the productivity of your employees but also adds to your overhead business expenses. Hence, it is important that you carry out a detailed investigation of your technological front to determine options which can speed up your operations at a reduced cost. For instance, options such as energy-efficient technology and green technology may come with high initial costs, but it can help trim down a major chunk of your overhead costs in the long term. You can also opt for software and new tools which are designed to reduce the time required for compiling information and reporting it to cut your overhead costs. Cloud services and other free software technologies come with hassle-free and easy implementation.

4. Employ Sustainable and Energy-Efficient Practices

Businesses the world over are switching to sustainable practices and operations for a good reason. Incorporating sustainable and energy-efficient practices in your business operations helps you score well on time, labor and financial fronts. Reduce, reuse and recycle – this mantra will help cut down on overhead business costs from almost all divisions of your business tremendously. From vehicles to equipment to lighting and many other aspects of your construction business can optimize their functions with reduced expenses by simply integrating sustainable and energy-efficient practices.

5. Consider Transaction-Related Taxes

Construction businesses can purchase construction materials tax-free and store them in a warehouse until required for a construction contract. The transaction taxes are not due until they are needed to be transferred to the entity which will perform the construction. This usually results in immediate savings through delayed tax payment. A lateral advantage to the company purchasing construction materials may accrue to the contractor by permitting a more centralized approach to inventory management.

Careful and detailed assessment of expenses is a must before planning and implementing any of these tips to curtail overhead costs. This will ensure maximum results. Time is also a critical factor when considering these cost-saving tips. Long-term planning and well-thought-out implementation of these tips will help boost your company’s financial bottom line.


Jeson Pitt works with the marketing department of D&F Liquidators and regularly writes to share his knowledge while enlightening people about electrical products and solving their electrical dilemmas. He's got the industry insights that you can count on along with years of experience in the field. Jeson lives in Hayward, CA and loves to explore different cuisines that the food trucks in the Bay area have to offer.