With rising material prices expected through 2021, here are 7 ways to save money when buying building materials
Construction materials make up a significant part of construction costs, usually 40-60%. Higher the cost of construction materials, higher will be the building cost. To generate more profit and to be as competitive as possible, contractors try to lower the cost of materials to create higher profits. The trick is in knowing how to reduce the overhead expenses. It requires planning the construction, procuring construction material from the best possible source, and updating your knowledge base with advancements in building materials. While you must have planned your project well, here are a few ways to save more on the construction materials:
Contractors will typically request quotes from multiple retail vendors, however there are a number of wholesalers that will supply to construction professional direct to site. While these are few and far between, finding a wholesaler that will deliver to site can bring considerable savings. Most wholesalers will require fairly large purchasing commitments though, so be prepared. Buying wholesale is typically reserved for companies buying larger quantities of materials at a much lower price. Retailers tend to sell at a higher cost usually, due to the convenience factors and additional services offered. Joyne's materials marketplace essentially aggregates the buying power of thousands of contractors nationally to help small and medium sized contractors get access to higher volume discounts.
When it comes to material pricing, consistency is key. Most contractors waste countless hours bidding each material package to dozens of suppliers for every project to ensure they are receiving a competitive price. I am sure that you will agree, that most contractors would prefer to work with 1 supplier, providing they knew that the price was always fair. At Joyne, we provide that level of transparency, we track the prices of over 20 Million building materials prices and update these daily, to show you the current market price and allow you to buy from dozens of vendors in 1 platform.
While the price you pay for materials is important, we can't lose site of the cashflow cost of purchasing building materials, especially when these often need to be paid for upfront. Having access to payment terms, such as net 15, 30 or 60 days can drastically change the cashflow profile of the project.
Stick to the supplier who offers a reasonable price regularly and is easy to work with. But don't commit your business to one supplier for the entire tenure. Negotiation skills matter when it comes to dealing with suppliers to get the best deal each time.
Construction sites usually have a lot of raw material left over, largely due to accuracy during takeoff and wastage calculation. It is important over time to continue to review your takeoff accuracy, to reduce waste. This is only possible if you have a structured takeoff and estimating process, including wastage factors that can be adjusted. Unfortunately, most contractors will leave their supplier do the takeoff. Take a lumber yard for example, they are incentivized to sell more lumber, so in most cases you will be pay for and be left with too much lumber. It goes without saying that if you do have leftover materials, considering storing or moving to another project to balance the costs. If your supplier allows it, ensure material items are scheduled for pickup and return as soon as the stage is finished, as damaged items will often now be accepted. It's worth noting, that some suppliers will charge a restocking fee, so ensure that is factored in to any credit you are expecting. Any materials purchased through Joyne can be scheduled for pickup and credit back, making this as easy as buying the materials in the first place.
The days of shopping around 3-4 suppliers and waiting weeks for quotes to come in are gone. Newer construction technology platforms are streamlining this process completely. While you can shop online through Lowes or Home Depot, they generally won't stock everything you need and there is not ability to request takeoff and material quotes. But a new wave of platform like Joyne provides a one-stop-shop for building materials and has estimators on call should you need assistance working out what you need.
It sounds counter intuitive, but as the proverb says "If you buy cheaply, you pay dearly". When buying materials, quality should be considered. Cheap lumber may look good on paper, but it will slow down productivity due to its warping and the extra work required to straighten it. Cheap drywall will crack when being installed, causing rework - you get the idea. Try and find the balance of quality vs cost and specify to your team and the supplier what quality you are looking for.
Building and material technology is always advancing, from new materials, to new construction methods and the astute contractors will stay abreast of these and adapt his construction methods to take advantage of new high efficiency materials that saves labor and costs. For example, insulated wall and roof system and semi-offsite construction methods are growing in popularity.
The construction industry sees developments too. New trends and designs can help save resources; there are efficient solutions that can save a lot of money. Keep an eye and keep your research strong while buying construction materials.
This is a more advanced technique, that not all construction companies will have the luxury of, but where possible, try to buy materials during lower demand periods. For example, the construction industry has its peak seasons and dull seasons like any other industry. Winter is a slow time for the construction industry. Starting construction during winters can save between 4-5% of the total building cost. Costs for materials are reasonable, services are better, and saving is higher during the dull season. Therefore, many contractors prefer starting projects during this season.
Specific projects such as roofing or renovation can save up to 10 percent during the winter season.
Forward buying construction materials can be another viable way to save, if you have the capital to fund such an exercise. Lumber for example rose on average 3% per week from about May 2020 due to Covid-19, the prices are still rising. A number of our customers ordered several house lots of lumber upfront and delayed the delivery several months. Saving them literally 10's of thousands. This is obviously an extreme example, but on a smaller scale, almost all materials are discounted during certain periods or offer further discounts on higher quantities, if you know these items will be used, taking advantage of these savings as they come up, will improve your bottom line at the end of the year.
Another option is to change materials completely, again during Covid, construction has become cheaper with metal framing as compared to lumber.