To entice my employees and subcontractors to remain on the lookout for cost savings, I offer to split the money. Even if the suggestion only saves ten bucks, I give them five. By saving a few pennies at a time, I’ve continued to save thousands of dollars every year.
Here’s how I make it work: When my plumber finds a more economical way to plumb a sillcock or vent a bathroom on one of my standard plans, he tells me. I agree to the change if it works as well or better than the original plans, and from there on, he keeps half the savings, while I keep the other half. If the same plumber suggests a change in the framing that saves me $100 in lumber, I send him a check for $50. This small incentive has worked wonders on my projects. That’s not to say that every suggestion is a good one, but my guys remain vigilant. They know that to be paid, their idea has to be practical, measurable, and reproducible on future projects.
Here’s another example: My electrician suggested moving a doorway 12 in. to save on the installation of one plug. The plan change saved $55 per house, so I asked him to lower his price by $27. That was five years ago. Since then, I have built this particular plan about 15 times a year. I figure this change has earned each of us nearly $1350. That’s not bad for a moment’s thought.
For my employees, it’s an especially welcome incentive. I make a big deal of it at the weekly office meeting, and each time we build the particular plan to which the cost-saving incentive applies, the employee receives his or her reward. It may be only $5, but it’s still appreciated because it entails both recognizing the contribution and sharing the rewards.
Now, I do the same with my customers. When I know a client is on a tight budget, and most of them are, I often suggest the same scheme. I will look over their plans and suggest ways they can reduce costs. If they like the idea, and we go with it, my change order will reflect 50% of the savings. If you multiply this kind of savings in your construction budgets, and add the revenue of cost savings passed onto your clients, you’ll see how even the smallest cost-saving suggestions can add up to big bucks by year end.
Fine Homebuilding Recommended Products
Fine Homebuilding receives a commission for items purchased through links on this site, including Amazon Associates and other affiliate advertising programs.
Affordable IR Camera
Reliable Crimp Connectors
8067 All-Weather Flashing Tape
