Is Self-Performing Really Saving You Money?

In today’s construction market, remaining a cost competitive bidder with decent margins is tougher than ever. 

We live in this world every day just like you because we not only sell Unistrut materials–we also do our fair share of installation work.  In this post, we’ll share some tips on how to improve your bottom line by examining material costs versus materials plus labor costs.

If you are like most contractors, the struggle to stay competitive in the market while maintaining profitable margins is a tough, uphill battle.   You can’t keep bidding jobs and running projects the way you did in years past and expect a different outcome.   Today’s construction market demands efficiency. How do you become more efficient you may ask?  Keep reading, and we’ll share some ideas to make you more efficient, cost-competitive, and profitable.

The first step is to review your materials sourcing.  Remember–it costs about $75 to issue a purchase order. Stop and think about it. You need to call for pricing, availability, and then compare quotes.  Next purchasing needs to issue a PO.  When the material arrives in your warehouse, you need to check the BOL with the PO and get the material to the job site.  You get the point.

When you take all this into consideration, when was the last time you asked your approved vendors if they carry additional products?   Perhaps you are buying hardware from Supplier A and anchors from Supplier B. Don’t assume your vendors will take the time to hunt you down, learn more about your business, and tell you what more they can do for you. You might pay $5.00 more for a box of anchors, but with one less PO, you are still ahead $70. To take this a step further, look at your tools. Are you driving to a big box store for your tools, Supplier A for your hardware, and Supplier B for your anchors? Unistrut Service Company is a stocking distributor of Powers anchors and fasteners, in addition to the entire Unistrut line you know and trust.

cut-to-length-unistrutHere is another example–purchasing pre-cut and bundled strut versus buying stock lengths.  Say your supplier sells only 10-foot lengths but you need six-footers. What if another vendor sells strut in 20’ pieces? The longer sections of channel yield only 2’ waste per section, rather than wasting 4 feet of material on each ten-foot section.

Now let’s take this to the next level. Say you have an Electrician on-site at $30/hour, and his sole purpose is to cut Unistrut for four days to support conduit. We’ll assume he can cut 20 pieces in an hour. That comes to 640 cut-to-length pieces over four days, with $960 in labor.  With our dedicated production saw, we can often cut strut for much less than you would in the field paying prevailing wages.  And if we “bundle” the materials per jobsite area, you’ll save even more labor costs.

To drive the point home, let’s look at another scenario. Let’s assume you have a job calling for 40 feet of strut, 80 fittings, and 30 anchors into the concrete deck. This situation can combine a few of the issues discussed above. We can cut, bundle, and deliver all your material directly to the job site.  You’ll pay a small (but fair) price for the cutting, bundling, and delivery, but think about the labor savings.  Chances are good you are paying more in labor costs by self-performing these tasks.

Sometimes one of the biggest hurdles we face is opening the eyes of Purchasing. Keep in mind that most purchasing managers are only responsible for negotiating the best price on materials.  They don’t always have the requisite skill sets to consider labor costs. Think beyond the cost per foot or cost per piece and look the services your vendors offer that can make your crews more efficient. Many of our clients are starting to see the bigger picture:  materials cost + labor cost = total cost.

Here’s one last scenario.  Let’s assume you are working a project where Unistrut Service Company is also on-site.  We have the expertise to design systems to include supports for your equipment along with ours. Perhaps the Electrical Contractor needs to run 14 pieces of conduit, the Mechanical Contractor has four small ducts, and the Plumbing Contractor has to run eight pieces of copper. Where does this all go and how is it coordinated? What if everyone tries to take the same place? Unistrut can create systems to accommodate all of these competing requirements, and we can usually modify existing systems or designs for much less than you can do it yourself. Sometimes adding a clamp or bracket to the design can save hours in field labor. We work with strut in the field every day–trust us–we get it.

Thinking outside the box may save you time and money.  If remaining a low bidder is taking too much of toll on profitability, remember to explore ALL of the available options:

  • Check your sources. Don’t just shop for the lowest price–shop for a vendor with the best service.  It will make your crew more efficient. Utilize materials and designs that save labor costs.
  • Consider reducing your vendor list and experiment with purchasing multiple items from one supplier. Sometimes single sourcing is slightly more expensive on a few select items.  That said, the cost of multiple Purchase Orders typically exceeds the potential increased per-piece costs you may experience when buying from one supplier.
  • Source out what makes you more efficient. Doing it yourself is NOT always the least expensive option.

If you are still reading this post, then we’ve captured your imagination and perhaps you are looking for a vendor who can help you streamline your purchasing and offer value added services to keep you competitive in the marketplace.  We can do all that, and help improve your bottom line profitability too.  To learn more, contact Unistrut Service Company for further assistance.