“Properly managing project materials can boost your bottom line.”
On today’s Coachcast we look at the importance of managing the full life cycle of materials on our projects.
Managing your project materials can have a hue impact on your bottom line. Are you taking the right steps to accurate manage your materials?
To look at this closer we are going to break this down into 3 separate phases of managing materials. They are pre-job, during the job and post job.
Properly managing our materials will help us increase our profits and better control our spending. By taking the time to track this properly you may uncover some huge waste in your current processes.
I was able to save thousands of dollars by taking the time to double-check my material usage. I was tracking the concrete consumption of my curb crews and noticed that we weren’t getting the yield I thought we should. We were still within our estimate but we were getting close to our contingency which wasn’t good. So I looked deeper to find out where the issue was, our estimates, our usage or our formulas. I had the crews start ordering 1/2 to 1 yard less than the calculated need for each run of curb during the day. By making this adjustment my daily production only went down about 3% but my concrete consumption went down by over 10%. From that I was able to determine that we had been wasting about 1/2 a yard per load of concrete. Add that up over 3 to 4 loads a day and 3 crews and we were wasting thousands of dollars on concrete going back to the plant. It wasn’t enough to hurt our estimates so we didn’t notice this in our budgets but it was a huge savings.
So you can see how this can have a big impact on your project margins and I hope you are ready to dig in and see how your materials are being handled.
Let’s start first with the pre-job stuff. You need to make sure that before you start any project you develop Purchase Orders for all materials. This is the easiest way to track your quantities and set alerts for overage. Be sure that when issuing POs to suppliers that will be delivering materials you include your delivery time-frame or lead time. Once you release your materials for shipping be sure to track them and follow-up.
Once your materials hit the project site you want to make sure we manage them properly during the job. First thing is to make sure we inventory them properly when they arrive. Next be sure to store them properly to avoid unnecessary waste from damage. The most important part of managing materials on the job is tracking the actual usage. We really want to know how much we are using and how fast. This can help plan future orders and delivery.
Now that you have properly managed your materials from purchasing through consumption there is a good possibility that you will have excess materials at the end of the project. That is not a problem unless there is too much excess. The key is to have a safe amount of excess to protect against any wasted time waiting on materials but not too much that we are throwing money away on every job. Once you start tracking this you will start to see patterns that can help you adjust your ordering or estimating on future jobs.
So start working on managing your materials and boosting your bottom line.
Start managing the full life-cycle of your materials
Be sure to issue POs for all project materials
Track daily usage on the project
Inventory at the end of the project and adjust