If you’re the sort to jump to the bottom line, you might want to jump to “MINIMIZING INVISIBLE WASTE,” below. Otherwise, this section may demonstrate that you’re not alone as a concrete contractor, particularly when it comes to a common stress: the seemingly-ever rising cost of cement and delivered concrete.
“What I’ve been frustrated with is the price of concrete delivery; It’s been increasing astronomically,” Said an independent contractor named Luther. “No one says why it’s going up that I’ve heard.”
Cement has been a hot item since the ancient Egyptians, who used a mix of lime and gypsum as a binding agent and base coating for interior walls. Even those in the lumber industry can’t deny the durability of the product in that case.
As with most pricing, supply versus demand is a leading factor. Cement trade with Canada has decreased, resulting in less supply. At the same time, the construction market has been booming in the U.S., so there’s greater demand. We’ll want to watch upcoming trade agreements for impact over the coming years, as well.
Then there’s increasing fuel costs, which was the number one reason cited by CEMEX USA when the first did a major bump in price just before the recession. Fuel costs go up, so will cement and concrete prices.
According to the National Association of Home Builders, ready-mix concrete prices are expected to continue the years-long upward trend in 2018, surpassing the 0.7% increase in 2017.
While the price for ready-mix and delivered concrete is likely to go up, as with the cost of labor, there are steps you can take to offset that increase.
Minimizing invisible waste
We’re used to thinking of waste in terms of such things as wastewater products set in concrete. When it comes to managing costs, invisible waste refers to lost profitability due to processes or factors that are often overlooked because of ingrained habits and doing it “how we’ve always done it” without occasionally pausing to look for financial waste.
When it comes to concrete work, the following are a few things to keep in mind to minimize unseen, wasted profitability.
Know Your Concrete Delivery Options
Consider the added fees for half-full trucks and look for alternative options. In some cases on small projects, you can even haul your own. Remember to factor in obstacles in distributing on site and extra steps needed to compensate for lack of truck and chute if using an alternative method of delivery.
Time is Money: Labor
The process of building efficiently is where the profit lives, and that efficiency is dependent upon the quality of your crew. Those contractors who have reliable, skilled and cohesive teams, work well with the GC, the other subs, suppliers and communicate effectively with customers have higher profit margins.
“The work is hard, OK.” Said Manny, a 3rd generation contractor in a family-owned concrete business. “Your crew isn’t just what makes the grind more enjoyable; If you’re the owner, the quality of your crew is what makes you more of that cash - or not. They make all the difference in both arenas.”
Quality & Maintenance of Tools & Equipment
Manny has something to say about not losing time to faulty equipment, as well. “You’ve got to be on top of your game with your equipment. Keep ‘em clean, do the due maintenance on them, have your fuel ready to go…,” he explained. “My old man always taught me to have two of everything you can ready to go, so you’re never shut down.”
When it comes to tools, just like the people in your crew, quality matters. Down tools means down, but paid, time for your crew.
“I’ve seen a core bit bend – right there in the concrete – as we’re using it!” exclaimed “Big Mike,” a contractor in Colorado and Arizona. “I’ve seen re-segmented diamond blades spitting off segment pieces flying everywhere. On top of safety [issues], you have to stop and go buy another. Even if you have a replacement on site, that’s more time and energy wasted on top of being frustrating as [heck].”
Save the aggravation. Save the time. Tools should be inspected, maintained and replaced when reliability first begins to show signs of diminishing. Get the best you can, because in the long run you’ll be more profitable – and with less headaches and unexpected costs of equipment failures.
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