When constructing new facilities, construction businesses spend a lot of time and money to ensure they erect high-quality buildings. However, teams can quickly exceed their budget if they aren’t careful with spending and execution.
What financial mistakes do construction companies make most often? How can they overcome these problems? Here’s a guide on avoiding blueprint blunders.
Costly Mistakes for Construction Teams
Construction requires heavy investments from the builder, client and other parties involved. One wrong move can quickly cost everybody thousands of dollars unnecessarily. These miscalculations are the most common in the construction business.
1. Being Reckless
Construction is a dangerous industry, with each job providing injury risks. Data from the Bureau of Labor Statistics (BLS) shows falls, slips and trips led to 35% of construction deaths in 2020. Accidents are detrimental for construction teams because one of their own has become injured and may be unable to work for a long time.
Financially, injuries cost construction companies with workers’ compensation, medical expenses and potential lawsuits if the employee decides to sue. Project leaders also must consider equipment damage, lost productivity and a compromised reputation.
Avoiding injuries starts at the beginning of the project. Project managers must review the potential pitfalls with all the contractors and subcontractors before the work begins — even if the crew contains seasoned veterans.
2. Being Wasteful
Waste is a significant problem in the construction industry. Research shows construction and demolition account for over one-third of the world’s waste and carbon dioxide (CO2) emissions. This issue causes problems for builders, clients and the planet at large.
The most common cause of waste is improper planning by the project or procurement managers. These professionals are responsible for determining how much of each material the building site requires. Over-ordering leads to excess materials, which some companies simply throw away. Instead, they should reuse these goods for another project or recycle them.
Another source of waste derives from improper work practices. For example, the site may lack quality control professionals. Without these workers, construction sites may use defective parts that compromise the building. The construction team will need to replace these parts, costing the project more money than planned.
3. Building Unsustainably
The construction industry has shifted toward sustainable building practices. The upfront cost of solar panels, smart thermostats and other technology may be high, but unsustainable building is a long-term financial blunder. Conventional office buildings consume more energy, require higher maintenance costs and have a short life than energy-efficient structures.
Modern clients are worried about their building’s greenhouse gas (GHG) emissions due to high energy consumption. A 2023 study shows green buildings produce up to 22% fewer GHG emissions than similar non-green buildings. Sustainable buildings increase property value, improve reputation and create longer-lasting structures, so avoiding green practices is costly.
Green building practices don’t require five or six-figure investments. For example, construction teams can implement sustainable plans using passive solar design. This strategy uses south-facing windows to maximize sunlight in the winter and reduce heating costs. Construction companies can also use electric vehicles (EVs) to reduce their carbon footprint. Electric excavators and telehandlers are becoming popular because they have no tailpipe emissions or harmful fumes.
4. Hiring Unreliable Contractors
Project managers can have the right ideas for safety and sustainable construction, but they only go as far as the contractors take them. Unreliable contractors can make life much more difficult for everybody involved because they cause delays and increase costs. For example, the contractor might not work diligently or frequently call out, causing the project to surpass its scheduled time. As a result, the project must pay overtime to the employees.
Determining contractors’ and subcontractors’ reliability is challenging, but project managers should ensure a tight vetting process to find the best candidate for the job. This procedure should ask prospective contractors for their references and credentials. Predicting what the contractors will do on the job site may be difficult, but it becomes easier with these supporting documents.
5. Not Checking Local Regulations
Building codes vary by location. Construction companies serving multiple cities must juggle the different laws for each jurisdiction. For example, some businesses in the Bay Area construct
office buildings in Oakland and San Francisco. The two cities are next to each other but have different regulations that teams must follow for their projects.
These rules may seem minor and nitpicky, but state and local regulations are critical for construction teams. Violating building codes could lead to hefty fines the company could have avoided if they researched adequately beforehand. At worst, regulators could shut down the project entirely, wasting everyone’s time and money spent on the construction thus far.
Designing Cost-Effective Construction
The price of construction projects can quickly become high if the team isn’t careful. However, there are ways to cut costs. These strategies demonstrate how to make cost-effective construction for office buildings.
1. Tax Breaks
The first advantage project managers should consider is tax breaks. The federal government and state and local administrations offer incentives for following specific criteria. For example, the Internal Revenue Service (IRS) allows construction companies to deduct depreciating business equipment as their assets lose value. The savings can be lucrative, with Section 179 permitting a maximum deduction of $1.05 million and purchase values up to $2.62 million.
Another tax break to consider is the Energy Efficient Commercial Building Deduction. This incentive is also under Section 179 and provides financial incentives to companies constructing energy-efficient buildings. The IRS says buildings with 25% energy savings earn $0.50 per square foot, with a maximum of $1.00 per square foot if the structure produces 50% energy savings.
2. Building Information Modeling
Construction is becoming more efficient thanks to advanced technology. Building information modeling (BIM) is an excellent example of software helping project managers, architects and engineers visualize projects before they begin. BIM technology is intelligent enough to detect safety problems and notify the team where the issues occur. Therefore, construction teams can reduce the risk of injury and delays from unsafe structures.
BIM makes construction projects more efficient on the job site and in the office. With this software, all parties can collaborate in real time and stay on the same page about the office building. Additionally, construction teams can BIM to sign documents in one place instead of relying on email or physical signatures for correspondence.
3. 3D Printing
One factor construction businesses can’t control is the weather. Rain, snow and hurricanes can damper construction plans and significantly delay timelines. Project managers can’t change the forecast, but they can take advantage of technology, allowing them to continue working despite the conditions.
3D printing is quickly growing in construction and other industries, with experts projecting the market to reach $37 billion by 2026. Construction is a significant beneficiary of 3D printing because it can produce materials and assemble structures in climate-controlled facilities. Work can continue during inclement weather if the facility has power.
Avoiding Costly Construction Mistakes
Construction is a high-stakes industry with risky jobs and investments. Projects can get expensive, with numerous opportunities for financial blunders. However, diligent project managers can ensure their office buildings remain within budget with intelligent planning.