How to control construction costs when raw material prices rise

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Recent global developments have brought about a change in the geopolitical and economic situation in all countries. Although we are currently experiencing a period of post-COVID recovery, the war in Ukraine has caused inflation to soar and accelerated the rise in interest rates. The most visible consequences for the engineering and construction sector are the constant increase in raw material prices and the lack of skilled workers, which has forced companies to manage their construction costs more closely.

In this sense, and because we know how important it is to have access to quality raw materials at a fair price, we present you with some tips to help you face the shortage and the constant rise in prices.

Practice efficient management of raw materials and other resources
The first step towards optimizing construction cost control is the iran whatsapp number database of efficient raw material management practices, namely:

Be aware of any recurring failures and/or waste;
Implement actions to reduce surpluses and eliminate waste;
Keep a record of all quantities of raw materials used;
Use tools that allow the integration of construction cost planning and construction budgeting ;
This way, you will be able to quickly understand where you are spending raw materials and other resources, thus being able to identify any unnecessary expenses, reduce costs and, consequently, optimize your money management.

Good planning is halfway to accurate calculation.
Following the logic of the previous point, once you have an idea of ​​the average cost of raw materials for each type of project, you will be able to calculate your needs more correctly.

Before starting a new project, encourage your employees to carefully calculate the quantities of raw materials needed. It will be essential to apply a certain margin to the calculations made, however, when you cross-reference all the data, you will obtain an estimate of requirements that is closer to reality.

Choose trusted partners with fast deliveries
A network of trusted partners contributes to the strength of your business. Make sure you have more than one supplier for the same material and give priority to suppliers who have fast procurement processes.

Keep an updated record of the payment terms applied by each supplier, the estimated delivery time for raw materials and the response capacity.

This way, and since you have in-depth knowledge of operations, you will be better prepared to act in any adversity, eliminating redundancies and wasted time.

Control the stock of raw materials
Ensure control over construction costs with construction management software. Integration mechanisms with the Logistics area will guarantee a high level of control over raw material stocks, while also ensuring increased productivity, as they eliminate redundant, time-consuming and error-prone administrative operations.

Implement construction cost control maps
Recently, the Portuguese Government created a new exceptional and temporary regime , allowing the contractor to submit a request for an extraordinary price review when a construction material, labor or support equipment, which "represents at least 3% of the contract price", undergoes a price variation.

Therefore, it is essential to implement a construction cost control solution that not only guarantees you greater temporal and financial control over each project, but also allows you to act quickly in the event of an abrupt increase in the cost of raw materials, alerting you to a situation where you could benefit from an extraordinary price review.

It should be noted that an efficient construction cost management solution allows you to access cost reports, profitability analyses and execution maps as well as reports with billing data for works; awarded, authorized, rejected works and missing work; analyses of budgets, re-budgets, margins, awarded values, payment plans, actual versus expected billing, additional contracts and other analyses by work, by type of resource, by specialty, by class of activity or by entity.

XLS Construction: the solution that guarantees control of construction costs
Along with rising inflation and raw material prices, long, complex projects with multiple stakeholders and extensive lists of materials make the Civil Engineering and Construction sector subject to numerous slippages.

Increase cost control of construction projects
With XLS Construction , access cost reports, profitability analyses and execution maps, which guarantee you financial and temporal control of each project.

Obtain reports with billing data for cases; awarded, authorized, rejected cases and missing work; analyses of budgets, rebudgets, margins, awarded amounts, payment plans, actual versus expected billing, additional contracts and other analyses by work, by type of resource, by specialty, by class of activity or by entity.

In addition to the ready-made analyses, it is also possible to easily create other reports using the formulas available in the solution.