Methods to Reduce Costs in New Home Construction

Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!

This article describes methods to reduce the overall cost of construction for a new home. The new home construction industry was hit hard by the devaluing of real estate during the four year period of 2008 to 2012. Since that time period, there has been a slow and steady rise with profit in the construction industry. However, the recent COVID-19 pandemic instantly squashed any chance of reasonable profits with new home construction. Thus, how does a contractor make a profit when building new homes in the construction industry? 

There are two primary methods of reducing costs of construction. The first is cost negotiation and the second is cost shifting. These two methods have several tools with each to achieve overall price reduction. The following describes each method and the respective tools within each method that you can use to achieve overall cost reduction. 

Cost Negotiation

This is the most effective way of reducing overall costs for the construction of a new home. For the new home builder, you need to review all of the subcontractors and material suppliers and determine the top 10 vendors for this service

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