How to Offset the High Price of Doing Business
by Ron Kubitz
May 17, 2011
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I read with great interest yesterday that construction materials prices rose 1.4 percent in April and are now 7.1 percent higher than at this same time last year, according to the May 12, 2011, DOL Producer Price Index. Additionally crude energy prices climbed 4.3 percent in April and have increased a whopping 20.6 percent over April 2010.
Equipment rental costs also continue to climb as do insurance costs, manpower-related costs, and so on. While there has been some increase in construction activity over the past few months, increasing costs continue to force downward pressures on profit margins. Of course, there are many reasons for these increasing costs, but given these circumstance, I am curious about what your company is trying to do, if anything, to cut costs.
Here are some possible ways your business could find some savings:
- Making larger hauls/combining trips for your truck fleet.
- Using smaller/lighter equipment capable of handling the task.
- Downsizing employees or increasing your use of contract employees.
- Training operators to use more fuel-saving techniques.
- Increasing employees’ benefit costs.
- Mixing high-consumption vehicles with those that are more fuel efficient.
- Keeping better track of equipment and fuel consumption.
- Purchasing more equipment instead of renting. In turn, selling equipment when not needed.
I could list more, but I am eager to hear what may be working (or not working) for your company. Hopefully we will soon start to see some light at the end of the tunnel!
Speaking of some possible light at the end of the tunnel, I just wanted to remind you about the “Rally for Roads” on the National Mall in Washington, D.C., to be held on Wednesday, May 25, 2011, at 11 a.m. This rally is being held to stress the importance of Congress taking action to pass surface transportation reauthorization legislation. Held in conjunction with the Transportation Construction Coalition Fly In, the rally will feature employees from all facets of the road construction industry, including materials providers, equipment manufacturers and dealers.
It’s time to unite for the cause and for the future of our industry!
Ron Kubitz
Ron Kubitz is the recruiting manager for Brayman
Construction Corporation, located in Saxonburg,
Pa. As an accomplished presenter,
Ron is often sought after in regard to his expertise within the world of social
media.
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Title: Rally for Roads
By: tim taylor
Posted: May 18, 2011 11:09 PM
Need to spread the word on the rally and mass the troops. Situation getting bad. Bidding at bare bottom and still not competitive.
Great ideas for cutting cost. We have raised insurance premiums and have cut down on company vehicles.
Title: Cost Cutting
By: Jen Dowds
Posted: May 23, 2011 7:21 AM
We have instituted job sharing and are now splitting duties instead of replacing folks that leave. have also opted to repair rather than replace and lease rather than buy.
Hopefully these need only be short term fixes but bid pressures are through the roof!
Timely piece!
Title: Cost Cutting??
By: Gary Snyder
Posted: May 23, 2011 9:35 PM
We are being bought old/sold! One less GC more unemployed!
That is cost cutting...thanks!
Title: Cost Savings Measures
By: Joe Rankin
Posted: May 26, 2011 7:23 AM
Small midwest excavating/dirt GC. We have tried the following:
1. Increased wellness intiatives
2. Improved and greater emphasis on training especially safety related
3. Review of all purchasing and logistics
So far so good..