Save your money when purchasing materials
If you’re in the construction business you’ll know how important it is to source your materials at the best possible price to keep your own profit margins healthy. If you’re a small firm, profitability can depend on getting your pricing right. Putting in the graft to get the costs of materials and tools needed for a job down will always pay off, but getting a good deal isn’t always easy. To lend a hand we’ve put together a few short tips to give your purchasing a bit of extra muscle to give your profit margins a boost.
Plan your purchasing
Right at the beginning of the job, when you are costing, start to plan the purchasing. What do you need, how much, when and where Getting quantities right depends on getting accurate measurements, so work of your drawings or plan. Working out when you need it will depend on your project management. Plan for materials and tools at the outset, use checklists for masonry, carpentry, plumbing, electrical and fittings and finishing – to make sure nothing is forgotten. Then look at the total quantities for the contract, not just one part of the contract at a time. For big jobs you may need to get a quantity surveyor to advise you, they can also help with sourcing materials.
Buy just enough, and just in time
Toyota developed a manufacturing system known as lean, based on getting the right parts to the production line ‘just in time’. They saved money by not holding stock and not wasting valuable time waiting for deliveries, but always having what they needed to hand. Over or under buying is expensive: more materials than you need cost you money if they can’t be charged or if you need to store them, wasted time is a very real cost that many builders just write off, but wasted time has a cash value as it reduces your billable hours.
They say business is built on working with people you know, like and trust, but when it comes to purchasing it can pay to shake things up a little. If you always buy from one builder merchants for example, look for another and compare quotes to help you negotiate better prices – if you know you can buy cheaper elsewhere it may spur your supplier to give you a better deal. Even though you like them, or have worked with them for years, your ‘usual’ supplier may need a gentle push to give you the best possible discount.
Builder’s merchants give trade discounts. How big a discount is something that may be fixed, but with independent suppliers usually something you can negotiate. If you’ve got a big job coming up, use it to win a better discount rate. Show your supplier the floor plans and drawings, talk them through your needs so they understand the scale of the work you have on. You’ll get the benefit long after the contract is over. How well you can negotiate could make the difference between a bog standard 10% and a glorious 30%, it’s all down to your powers of persuasion. There’s no point negotiating in some major suppliers like Wickes though – they don’t give a discount and the chains that do often have set rates based on turnover.