The U.S. Department of Commerce says that construction spending during August 2017 (the latest figures available) was estimated at a seasonally adjusted annual rate of $1,218.3 billion – 0.5% above the revised July 2017 estimate of $1,212.3 billion and 2.5% above the August 2016 estimate of $1,189.1 billion.
With a predicted slowdown for the remainder of 2017 and throughout 2018, rising materials costs are a concern. According to the AIA, the past year has seen oil-related products (e.g., diesel fuel, asphalt) rise at a 20% rate; metals (e.g., steel, copper, aluminum) at a 10% rate; and other basic building commodities (e.g., cement, gypsum board, lumber, plywood) at a high single-digit rate.
In June, AIA surveyed architecture firms and asked if higher material costs were affecting them. Most firms agreed that material costs have changed significantly, and a third of the polled firms said the increases are a serious problem; an additional 45% indicated that the increases were somewhat serious.
In response to the situation, architecture firms, construction firms, contractors, and their clients have been forced to scale back the scope or size of projects, put projects on hold, or flat out cancel them.
Luckily, there are ways to cut costs without cutting projects – through the smart and thoughtful use of technology.
Three Ways to Cut Construction Costs
VIRTUAL/AUGMENTED REALITY
While the initial expenditure for this technology can be a little pricey, the ROI is worth it. Construction sites are using virtual reality and augmented reality to create 3D images and review plans and materials, which can be in place before ground is broken on a project, enabling users to catch errors and inconsistencies. (We wrote about VR and AR more in-depth over here if you want to dig in a little deeper.)
DRONES
The construction industry, which typically lags behind when it comes to jumping on board with new technology, has surprisingly emerged as a key driver of the growing commercial drone industry. Drones, also known as unmanned aerial vehicles (UAVs), offer many cost-cutting benefits – they’re less expensive than flying a manned aircraft and faster than human surveyors, for example. Depending on the software, builders can turn drone sensor data into 3D structural models and topography maps, which allow construction companies to make better use of resources on a job site, minimize issues, reduce costs, and mitigate delays.
GPS FLEET TRACKING
While site workers are rarely fans of GPS tracking, driver accountability can be vastly improved using reports and alerts that monitor speeding and engine idling. (Up to 80% of the fuel wasted by drivers is because they leave engines running while the vehicle isn’t being driven.) GPS tracking can reduce theft and even cut costs, as some insurance companies offer discounts for companies that install tracking devices.
Finding and utilizing the right technology is the answer to preventing the effects of the climbing costs of being in the construction industry. Although the initial expense may seem high, the ROI can be significant. Contact us for more information.