Builders across the country are looking for ways to reduce their direct construction costs by 15%-20%.  Have you gone through a complete plan review, stripped options from your base houses, cleaned up your building specifications and are still coming up short in terms of reducing costs?  If so, it’s time to look at how you purchase.

What percentage of your cost codes are done with turnkey bids vs unitized pricing?  Your best opportunity to cut construction costs is unbundling your turnkey bids.  You can easily save 20% on roofing by splitting up your material and labor.  That could reduce costs up to $3,000 per house.  If you build 200 houses a year, that’s a savings of over a half a million dollars.  What about drywall?  Not only would you save money by separating out your material and labor, but you could also expand your labor pool.  How many drywallers are out there that don’t have the capital to front all of your drywall?  They would jump at the opportunity to do your work if you provided the material.

Not only does unitized pricing help you lower your costs, but it gives you ultimate transparency.  You now know the cost of every piece of material that goes into a house.  If you want to take another look at your plans and see how certain changes would affect your costs, you don’t have to send everything back out to bid.  You have the ability to rerun costs at your fingertips.

Making the transition to unitized pricing offers an overwhelming number of benefits, but it doesn’t mean the transition has to be overwhelming.  Shinn Consulting offers valuable tools to assist with your takeoffs and converting the data into an upload for your ERP of choice.  Contact us at 303-972-7666 or to discover how we can help you take advantage of the benefits of unitized pricing to reduce your direct construction costs.

Please join us for Webinar Wednesday on May 24, 2023, for a 15-minute estimating with PlanSwift demonstration followed by a Q&A session with our estimating team. They will be answering your questions on estimating, turnkey pricing vs UPM and PlanSwift functionality.

Kim Dickson is a consultant at Shinn Consulting. She is passionate about people and processes. Her areas of expertise include purchasing, negotiations, processes, scheduling, and quality control.