How to Make Money With Construction (25 Best Ways & Tips)

Yes, it’s not that hard to make money with Construction if you know what to do and tips to help you.

Thankfully reading this article will provide you with very helpful tips on exactly how and what you need to do to make money with Construction.

          

Why Make Money in Construction?

Many of the employment opportunities that we have started with a “blank sheet of paper” or just an idea.

Eventually, the idea comes to life because there are resources that are invested in that idea and the idea becomes a product or a service.

Some of the invested resources include the time of people, their energy, financial resources, etc.

It is always amazing in today’s economy to witness the birth of a company that is developed from an idea and that idea explodes into something from nothing and creates that ripple effect as the waves of this idea spread out and affect other aspects of the economy or business world.

 

Importance of Making Money With Construction

If you have ever been to a construction site or are involved on a professional level, you most likely are amazed that something significant is constructed from nothing that is there, to begin with.

Of course, there are a lot of significant resources that are poured into the building or construction of a project.

To maximize these resources and realize profitability, it is important that, especially in the construction business, waste is minimized and activity is maximized at the construction site.

Let us, therefore, put on our hard hats and take a look at ways to help a construction team maximize their earnings.

 

Personal Story 

While working with a not-for-profit, we were blessed to have a donor in the community present to us the gift of a 40,000 ft.² vacant warehouse.

We intended to utilize the facility or parts of it to build a homeless shelter, and transitional living facility and also utilize offices that could be a one-stop center for other not-for-profits to provide service to the homeless.

Our first step in the process was to secure money for this remodeling to occur and once secured, we were able to employ an architect and then move forward with a bidding process to select the general contractor.

The entire process took about two years from start to finish due to a feasibility study being conducted, securing funding, contracting with the general contractor, having the work completed, etc.

It was a long-drawn-out process but the reality and blessing were that we were able to open up a 100 bed-shelter for those that did not have a home.

After a pause and taking in a deep breath, we realized that the rest of the building needed to be utilized and that what we had accomplished was only phase 1 with plans for two additional phases yet to be completed.

 

25 Best Ways & Tips to Help You Make Money With Construction

 

1. Be Selective   

One of the ways that a construction enterprise can save money is to pick and choose which construction projects they would like to bid on.

Not all opportunities may be a good match for your company and as such, sometimes it is best just to take a pass and not worry about all of the time and effort, and money involved in the bidding process.

 

2. Team 

A successful component of a profitable construction company is the team that the company has in place so that the construction of the project can flow like a well-oiled machine.

As part of that process, having the right vendors, suppliers, business consultants, subcontractors, etc. in place is critical and one does not have to reinvent the wheel each time a project is started.

 

3. Relationships 

As with any involvement with individuals or companies, relationships are key and paramount.

A powerful commitment in the light of relationships is for the contractor to be involved in networking not only within the construction field but outside of that business arena.

Therefore, it is important to be involved in business activities within the city such as membership in the Chamber of Commerce, service clubs, etc.

 

4. Word-Of-Mouth 

One of the best endorsements and ways to be involved with new construction projects is the integrity that you bring by being successful on the job site, staying within budget, and finishing the project on time.

Word of mouth referrals are critical in your line of business and can go a long way in obtaining invitations to bid on projects.

 

5. Bonding Costs 

One of the critical elements in the construction business is bonding.

The construction business is required to have several bonds such as construction or license bond to operate legally in the city or state where they are working on projects.

As part of the bond process, it is important to have these bonds in place based on your credit as well as mitigating risk to the issuing agency of the bond.

Also, the business’s financial documents must be in order before an application is made and any claims should be minimal and that should be a focus of the construction business you are in.

Ultimately, reducing the cost of bonds subsequently leaves more money in your business pocket.

 

6. Contractor’s License 

A way to increase your business is to make sure that you have a construction contractor license.

When a potential client knows that you are licensed they understand that licensing includes an exam, background check, and the requirements needed to obtain a surety bond.

Additionally, there is more of a trust factor in working with a licensed contractor because they have met the requirements of the state or city in which they are located.

 

7.Cut Out Waste   

Any waste of materials or misuse can detract from your profitability.

With that in mind, it is important to emphasize to the construction workers to be aware of being wasteful on the job site and understand that the loss of materials not only affects the business’ bottom line but their bottom line as well as employees.

In addition, it would be worth the extra time to calculate clearly and to double verify the measurements as it relates to the ordering of construction supplies for the accomplishment of the project.

 

8. Invest in Business 

As with any business, it is always important to reinvest a percentage of the profits back into the business.

This holds for the construction business and reinvestment of profits should be proportioned back into the business to buy tools and equipment that will enhance the company’s ability to provide quality construction work.

Also, it is important that when the tools are utilized that they are inventoried after use to ensure that there is no loss of equipment.

 

9. Maintenance 

Also, as it relates to tools, you are well aware that a variety of different tools are used to perform different job functions at the construction site.

These tools and equipment should go through required maintenance and upkeep according to the suggestion of the manufacturer.

Care for tools and equipment should be accomplished on a regular preventative maintenance schedule which in turn will save the company money in the long run by extending the life of the equipment.

 

 

10. Don’t Cut Corners 

The old axiom is you get what you pay for can be applied if trying to save money by buying cheaper equipment.

The reality is the product won’t last as long and you’ll end up replacing the equipment sooner than later.

A good tip to make money at the construction site is to purchase tools and equipment that are quality-made and not cheaper.

In addition, if a certain tool is needed and is not available this may damage the construction relationship and potentially increase surety bond cost for claims when schedules are not kept and met.

 

11. Back Cost 

At the construction site, not everyone is necessarily fully engaged and making the best use of their time.

It is important to evaluate the back costs process as it relates to hours worked and worked efficiently.

For example, if there are a couple of workers at the site and they talk too much and are not fully engaged in performing their task or job, it may be important to split them up at the construction site.

Additionally, there may be workers on the site whose skill levels are not quite where they should be.

It may be important to provide extra training for them as it relates to them being more efficient at their job.

To accomplish this, it is important for the site foreman, and all involved to get together and break down the forecast versus the actual expenses and make changes accordingly.

 

12. Manage the Subs 

An important element of the construction business is the use of subcontractors.

It is important to get the right guys needed for the job that is being formed.

As part of the quality management of the sub-trades, it is important to be clear with everybody as to what the trade times are and when they need to be accomplished.

The reality is if that the subs do not meet the scheduling, this can create a holdup that will have a domino effect on other aspects of the jobs that are scheduled.

Also, small incentives can be implemented to help the subcontractors stay on task which could include lunches, gift cards, etc.

Also See: Best Money Making Side Hustles for Engineers.

 

13. Travel Expenses 

With the rising costs of fuel, travel must be maximized and minimized as much as possible.

To save money, a policy must be in place that a particular number of individuals should be transported together rather than separately using different company vehicles.

Also, your hub of operation must be set up as close to where the construction site is to save on fuel and time as well.

 

14. Volunteers 

There are opportunities to utilize an individual who does not require payment.

Instead of their being at the construction site, their payment is the experience that they receive by being at the job site.

You can work with universities or schools in your area to devise a program that in exchange for an individual having the opportunity to be involved first-hand on the construction site and being awarded credits as an on-the-job training experience, will work out for all individuals involved.

 

15. Software 

A critical option that should be part of your cost savings measures is to use a project management software program.

Some of the software is pertinent to homebuilding and provides builders with tools to manage the project, financials, and clients.

The software also allows the contractor or the construction worker to sync data from estimates, specifications, bids, change orders, and budgets.

To learn more about construction software you can go to: https://www.softwareadvice.com/construction/project-management-software-comparison/.

 

16. Order Efficiently 

To maximize your profits on a construction project, it is important to order efficiently.

Through efficient ordering and getting the right quantity, you will eliminate unnecessary trips to suppliers which can add to your expenses for the overall project that you cannot pass on to the customer.

Also, you should track the materials that are being utilized on the job and order in large quantities as possible to save money by buying in bulk.

Also, it is important to check with merchants frequently.

This should be done every 90 days because the prices of materials can change dramatically over months.

 

17. Reuse 

Wherever possible, it is important to use any remaining materials that may be leftover from previous jobs.

This will certainly cut down on your construction costs and if the items cannot be reused then check with the supplier to see if you can return any of the unused materials for a refund or a credit.

Related: How to Earn Extra Money from Recycling or Reusing.

 

18. Protect 

One of the difficulties in having your supplies at a construction site is maintaining the security of those supplies.

Therefore, inventory loss or protection against missing materials should be a concern and actions should be taken to mitigate or prevent the loss of materials.

Security measures should be taken and use construction covers for job site protection, enclosures such as building or scaffolding, protecting the equipment, etc.

Also, a plan should be in place on where the materials will be stored to prevent their loss due to thievery or other actions.

 

19. Variations 

For a variety of reasons, sometimes a vendor is not able to provide a particular piece of equipment or item as it relates to the contract in working with you as the builder.

If there is a change in the contract this is called a variation.

This could include such items as not having the right equipment, lack of scaffolding, etc.

If this is the case and there is this variation in the contract, you need to be upfront with the vendor that there will be a charge administratively for any variations.

 

20. Subs-Rubbish

A significant part of the construction site is the trash that needs to be thrown away.

Often, a large trash container is on-site and the rubbish can be thrown into this bin and at times taken off of the construction site, dumped, and then brought back into the building area.

As part of your working with subcontractors, they need to know that they are responsible for their particular part of the construction activity, and as such, they need to be good partners in sharing the income as well as the expenses.

Therefore, it is important to be upfront with the subcontractors to require them to have their trash bins available and not take advantage of the general contractor’s provision of a trash container.

Also See: How to Make Money With a Box Truck.

 

21. Fixed Prices 

When working with subcontractors, it is also important that the scope of their involvement and work is delineated.

The agreed-upon contractual trips should be drawn up in the contract.

Also, it is important to shop around at a minimum of every 90 days to negotiate a better rate and then make sure that you add a 15 to 20% markup.

 

22. Quotes 

When it comes to providing quotes for a job that is to be completed, there are two schools of thought.

One school of thought is that you provide free quotes in hopes that the individual will utilize your construction services.

The other option is to charge for quotes because there is a significant amount of time and effort placed into determining what the cost of a project will be.

The choice of whether to provide free quotes or charge for a quote is completely up to you as the construction owner and is something that should be thought out and determined whether this is something that the company can absorb.

 

23. Supplier Prices 

A significant expense, in addition to employees, is the cost of materials.

As much as you are able, it is important to negotiate with suppliers as it relates to prices.

One of the negotiations could be if you purchased a greater quantity, with the supplier reducing their price as it relates to buying more product.

Also, it is important not to take the first or second supplier quotes but to shop around to ensure that you are getting the best supply deals.

This should be done at least every 90 days due to the fluctuation of supply prices.

 

24. Control Orders and Cost 

An important aspect of the delivery and inspection of supplies is the use of an in-house purchase order process.

When a delivery arrives, the foreman should always check the product and ensure that any products that are not up to par should be rejected and credits issued or replacement products provided.

This is all part of the quality control and to ensure that the optimum product is being provided as per the agreed-upon cost of the supplies.

Also, questions such as who loads and unloads the product, who measures, who does quality control, etc. should be part of the control order process.

 

25. Analyze Your Project 

When the project is over and the final walk-through is conducted and everyone is satisfied, the job is not quite over.

It is important to gather together the significant players of the operation and analyze the job that was performed and especially as it relates to profitability.

Specifically, the analysis should include the estimated profit to what was received, did the cost matched up with what was estimated, was enough overhead accounted for in submitting the bid, were there any issues that impacted the productivity that perhaps created a loss, etc.?

After capturing all this data, it is important to use that data when the next project is bid on and to incorporate any needed changes into that process.

 

Earning Money in Construction FAQs

 

What Are the Typical Contractor Overhead and Profit Margin?

The overhead for a contractor includes all of the hard costs of the job.

Those costs can include labor, supplies, material, and more.

The profits for a contractor are what is leftover or what you are paid once all of the expenses have been satisfied.

According to Businessecon, the minimum bottom-line for profit should be on the average 9.4% and for trades and some contractors should be 11% after all of the income tax has been paid out.

 

What Are the Greatest Challenges Facing the Construction Industry?

The greatest challenges facing the construction industry today include:

• The rising cost of materials
• Cost of labor
• Increased competition
• Shrinking profit margins

 

You Can Do It

The construction business is a critical industry for any country’s economy.

An increase in construction is an indicator that the economy is doing well, businesses are realizing profits, working people are buying homes, etc.

Making money in the construction business can be a tight rope and bidding can be very competitive.

Therefore, a general contractor or subcontractors working within the construction business needed to make money and yet not bid themselves out of a project.

By adhering to many cost-savings measures, one can trim their overhead costs and add to their profitability.

 

Conclusion 

It’s always amazing to be at a construction site and see all of the various trades and crafts coming together to create a project as required by the customer and designed by the architect.

Of course, everything comes with a price and with the increase in prices for construction across the board, one needs to implement several actionable items to reduce waste, maximize workers’ time on the job, coordinate the subcontractors, etc.

A construction project takes a team of professionals who know their trade and work together to maximize their time, energy, and knowledge to ensure that the job is completed satisfactorily and that profits are maximized.