4 ways to avoid added costs on construction material purchasing

Construction professional in a lumber yard

As a builder, you have to understand your costs on three main components – materials, labor and equipment. However, managing supply costs is the best way to save money. You carry risks on every project, and with materials being the second largest cost after labor, you can’t afford to overlook opportunity to increase profitability in this area.

What is construction material management?

Construction material management is the process of sourcing building materials and products at a reasonable cost while ensuring their availability — at the right place and time — to meet project specifications and deadlines.

By improving your management of supplies and products, you’ll increase your profits without needing a ton of additional resources. Here are four ways you can save on costs associated with construction material purchasing.

1. Become the builder of choice for your local vendor

Ensuring on-time payments for your material vendors should be a top priority, especially in the construction industry. With high prices and continued supply chain issues, you should be doing everything you can to maintain partnerships with your preferred local vendors.

You can’t run a successful business without getting paid – and the same goes for your suppliers. Without your payments coming in, they have nothing to work with when purchasing products and materials. Prioritizing on-time payments to your vendors will increase their confidence in you as a business partner and build trust.

Fostering professional relationships like these is crucial in the competitive construction industry and may even guarantee you lower material costs. If your supplier knows you’re a customer that pays on time, they may be willing to give you better pricing with no hidden markups.

2. Join a group purchasing organization

GPOs in construction use the combined buying power of several builders to negotiate better pricing and account representation from local material vendors and brand manufacturers. They streamline the purchasing process for their members and allow them to compete with large national companies.

Securing these kinds of volume-based discounts with the help of a trusted network like CBUSA is a great way to ensure you’re getting the best material price.

By participating in a few local committed purchases and national brand contracts, CBUSA builders saved over 15% on material costs in initial stages like lumber and drywall. When averaged out, that amounts to over $12,000 saved on each build.

In addition to these major material savings, you’ll also have the opportunity to work with other like-minded builders on material purchasing decisions and best practices. Members strategize as a united front in order to achieve profitability on every project.

3. Protect profits through committed buys

As a member of CBUSA’s group purchasing organization, you’ll have access to purchase materials at lower prices through committed buys. You’ll first work with your preferred supplier and forecast guaranteed business for a certain amount of time and an estimated number of project starts.

Once these terms are established, CBUSA’s team will review the market and negotiate material costs through the committed buy based on the market price – instead of supply and demand. This allows your local vendor to keep a consistent margin and ensure the materials you buy are always priced competitively.

4. Implement construction software to better manage material processes

Managing materials is a big part of every job. The process can be complicated with lots of moving parts and variables that can cause projects to derail quickly. Trying to keep track of it all manually is nearly impossible, and mistakes lead to extra cost – especially with material prices as high as they are today.

So, why not make the process easier by tracking it all in one place?

Imagine having a single tool that allows you to measure blueprints, estimate material costs, output invoices and track budgets in a single platform. Well, now you don’t have to imagine it – this could be your reality. You can streamline your material estimating and other project management processes with Buildertrend’s all-in-one construction software.

From initial sale to takeoff and project planning to final walkthrough – everything is completed and saved in one convenient location. Automated processes and integrations with accounting tools like QuickBooks ensure your finances are where they should be to earn a profit on every job. Your team can communicate in real time, track daily progress and make schedule changes when needed. You can even pull reports to understand the outcome of each project, so you know where you had success or where adjustments need to be made for next time.

How can CBUSA help save you money on material purchasing?

As a member of CBUSA, you’ll get help with purchasing your materials, products and appliances. We work with our builders to help them understand their material needs, secure committed buys through our preferred local vendors and increase profits.

At CBUSA, we partner with the best suppliers, manufacturers and brand partners who prioritize our builders and get them what they need. Become a member today and start experiencing the benefits.

About The Author

Chelsea Cole

Chelsea Cole Chelsea Cole is a senior content marketing specialist at Buildertrend