Margins continue to grow tighter and tighter in many fields in the construction industry, as skills shortages drive labour price rises and a weaker pound raises the price of imported materials. Raising your own prices is one way of reclaiming your margins, but cutting costs instead of (or in addition to) may help you maintain your competitive edge.
Estimating software can play an important role in cost-cutting. Here are five ways savings can be found using estimating software.
#1 Time savings
Creating an estimate is a necessary task for every job you want to work on, but there’s very little value generated in the estimating process itself - which often leads to contractors cutting corners and producing inaccurate estimates which cause problems further down the line.
If you use estimating software, you can produce speedy estimates without compromising on accuracy, netting you time savings that add up to become hugely significant over the course of a month or year.
Having reclaimed several hours every week or month, this time can be spent on more productive areas of the business that generate real value.
#2 Reduce mistakes
Accurate estimates benefit both you and your clients directly. Your estimating software ensures there’s no need to purchase extra materials or plant at the last minute - you know exactly which resources you need, and when you need them.
Estimating software also reduces the human error associated with calculating estimates - a typo in an Excel formula could lead to a highly misleading estimate, and therefore an inaccurate profit margin. While the calculations produced by estimating software are still reliant on the data you enter (or the pricing libraries you use), there’s much less opportunity for human error to interfere in the process.
#3 Learn from discrepancies
Estimating software produces estimates based on granular data - that means you can drill down to individual costs. This feature comes in handy once a job is complete. You can compare actual cost data with estimated. No estimate is perfect - some cost discrepancies will emerge, and you can quickly and easily see where these have arisen, and adjust your figures for next time - perhaps you underestimated the waste percentage for a certain type of material.
#4 Easily manage subcontractor quotations
Send out trade packages to subcontractors and invite them to submit quotations. Your estimating software will then let you easily compare their rates in various ways, and you can update your estimate based on the rates provided. Choose the ‘best’ subcontractor for the job, with full visibility of the options available to you.
#5 Improved client relationships
Client relationships are all-important in the construction industry, and a professional, timely, accurate estimate can certainly strengthen those relationships. Instead of presenting a quotation on the back of a scrap of paper, you can email them a detailed estimate showing them exactly how costs arise. Happier clients generate more leads in the future, reducing the need for you to pay out for marketing and advertising merely to keep afloat. Your improved reputation will also help you justify your quotes - meaning that you might get the job even if you’re not the lowest bidder.
Most cost savings generated by estimating software are indirect, but that doesn’t mean they’re insignificant. To learn more about how estimating software can work for your construction business, check out Esti-mate’s product overview - it’ll give you an idea of what our software is capable of.