5 Resource Planning Mistakes That Drain Contractor Profits

Resource planning is the preparation of all necessary resources to ensure a project is completed within budget and on time. Many industries, including construction, conduct resource planning before a project to ensure the most efficient use of their resources. 

Contractors need to plan and schedule the use of a wide range of resources throughout a construction project, including: 

• Labor: This includes all the people working on the project, such as project managers, general laborers, engineers, electricians, heavy equipment operators, and site managers. The labor you need will vary depending on the project. For example, you may not need an electrician for a roofing project unless you are installing solar panels. 
• Tools and equipment: This includes hand tools such as hammers, power tools such as drills, heavy machinery such as concrete mixers, and safety and support equipment such as ladders.
• Supplies and materials: This includes all raw materials, such as wood, concrete, bricks, or steel, and all hardware materials, such as nails, screws, brackets, or switch plates.
• Space: This includes the spaces or facilities where the project takes place, from housing estates and roads to factories and warehouses. 
• Money: This is the amount of money a contractor or construction company has been given to complete a project on behalf of another business or organisation.

If contractors don't conduct resource planning, a project is more likely to be delayed, as they might have taken on a project they don't have the right resources for. Delayed project completion is never great for success, but can be particularly damaging to budgets and brand reputation in the construction industry. 

The only way for a construction businesses to succeed in a competitive industry is to conduct resource planning to better understand which projects they can handle. However, it's easy to make mistakes in resource planning, and many contractors do. 

This article will look at five common resource planning mistakes that drain contractor profits. 

1. Underestimating or Overestimating Labor 

It's essential to understand that your workers are the most valuable resource in a construction project. Without them, no tools would be operated and no materials would be utilized. 

When resource planning, you need to account for the exact right amount of labor at each project phase, as both underestimating and overestimating can cause issues. 

Underestimating labor leads to bottlenecks where one trade is waiting on another to finish a task or phase. In addition, labor will be required to work longer hours, leading to fatigue, lower productivity, and a higher risk of accidents.

In contrast, overestimating labor leads to there being more people than tasks or materials, which increases labor costs without improving productivity. 

2. Ignoring Labor Skill Sets

Not all workers have the same skill sets, so it's essential to schedule according to what they do best. For example, scheduling a general labourer to complete an electrician's task will cause quality issues or safety risks, as they are not adequately trained.

In addition, some workers may need to update their licenses or conduct safety training before a new project or task begins. 

3. Inaccurate Material Forecasting

When project managers don't accurately forecast materials, it can lead to costly rush orders or last-minute purchases. These unexpected expenses disrupt budgets and make it harder to manage construction cash flow effectively.

In addition, inaccurate material forecasting can cause project delays because essential materials aren't available, can waste storage space by over-ordering, and can reduce productivity by leaving workers idle. 

By improving forecasting accuracy, construction companies can ensure materials arrive on time, labour productivity remains intact, and the cash flow is steady throughout the project.

4. Overlooking External Delays

Some delays are beyond your control, such as supply chain issues or days off due to rainfall and extreme heat. However, it's essential to plan for these delays when preparing a project's timeline.

In addition, maintain a pool of workers who can shift tasks as needed to avoid underutilized labor. For example, if heavy rainfall halts concrete pouring, reassign those workers to indoor prep work, if possible.

5. Ignoring Worker Health and Safety

Accidents are a significant cause of project delays in the construction industry, because work is often stopped whilst the hazard is assessed and the site is made safe again for other workers. In addition, regulatory bodies like the Occupational Safety and Health Administration (OSHA) may suspend work until safety compliance is confirmed.

When conducting resource planning, it's essential to factor in required rest for your labor team, regular safety briefings, and the necessary personal protective equipment (PPE) to minimize hazards and accidents. 

Ready To Conduct Resource Planning?

Well-thought-out resource planning is essential in the construction industry, as a wide range of labor, tools, and materials are used throughout every stage of the project. Whilst resource planning mistakes can result in project delays, unexpected costs, and safety risks.

Conduct resource planning ahead of every new project if you want to succeed in the industry, impress clients and customers, earn the most profits possible, and increase labor retention.

Cover Photo by Yan Krukau