Proactive cost management is the key to staying ahead of the competition and achieving long-term success in the construction industry; however, it can be difficult to keep prices competitive while not taking a hit to profit margins. Many construction businesses are having to contend with the increasing cost of materials while also having to try to control expenses on the fleet side—which isn’t immune to inflation. 

On top of all that, according to a blog on, employee turnover in construction is still quite high compared to other industries: roughly 68% in 2021 versus a 30-40% average. While the cost of replacing an employee varies, a good estimate is about 20% of their annual salary, plus associated costs, such as recruiting, training, and productivity loss, according to a blog on


Getting a handle on fleet costs is no small feat, but a great first step is performing a comprehensive cost analysis. Knowing how much was spent versus budgeted for—and where that spend went—can help fleets better understand where and how to improve their operation. For example, say you budgeted $250,000 for repairs and spent $750,000. You can then look at the maintenance budget versus spend to see if proper preventive maintenance (PM) is being performed. Or perhaps there are one or two vehicles or pieces of equipment driving up the repair spend, signaling it’s time for replacement.

While creating a fleet cost analysis can be a complex task, especially when relying on manual processes, fleet solutions like fleet management software (FMS) simplify this task. FMS automatically collects, consolidates, and aggregates fleet data—including data from integrated software like telematics—for each asset, providing a comprehensive view of expenses. This allows for granular expense analysis and informed decision-making.


Inflation can present a challenge to cost management efforts, potentially necessitating price increases for your services. However, to maintain competitiveness, construction fleets can focus on strategies that mitigate the impact of inflation, like increasing asset lifecycles through optimized PM schedules. 

Additional considerations include:

  • Optimizing parts acquisition and inventory, and monitoring cost trends and timing for purchasing parts
  • Tracking and monitoring supply costs, effectiveness, and usage, and considering switching products or brands if it’s feasible and profitable
  • Enhancing customer experience to justify any necessary price increases, or otherwise differentiating your business through exceptional service quality
  • Negotiating favorable terms with your suppliers, including fixed pricing agreements or long-term contracts and exploring multiple suppliers for key materials
  • If possible, choosing projects that offer higher profit margins to offset increased costs
  • Building financial reserves to cushion against sudden cost spikes or economic downturns

Remember that staying competitive during inflation requires adaptability and a proactive approach to cost management. It’s crucial to continuously monitor your financial health, reassess your pricing strategies, and explore innovative solutions to maintain your competitiveness.


Retaining employees might be one of the less talked about aspects of effective cost management, but it’s no less impactful to your bottom line. Investing in your workforce not only helps control expenses but also fosters a loyal and skilled team that contributes to long-term success. Companies that invest in their employees both financially and from a growth standpoint tend to have higher retention rates.

Construction businesses can invest in their employees in several ways, including:

  • Comprehensive Training Programs: In construction, mistakes can be costly, both in terms of rework and potential safety incidents. Developing comprehensive training programs for employees can help reduce mistakes, accidents, and rework, and ensures that employees are well-equipped to perform their jobs efficiently and safely.
  • Competitive Compensation and Benefits: When you pay well and provide benefits like health insurance and retirement plans, employees are more likely to stay with your company for the long term.
  • Career Development and Advancement Opportunities: Employees are more likely to stay with a company when they see opportunities for growth and advancement. Invest in programs that help employees develop their skills and advance in their careers within your organization.
  • Employee Recognition and Appreciation: Recognizing and appreciating the hard work of your employees can go a long way in building loyalty. Simple gestures like awards, bonuses, or regular expressions of gratitude can boost morale and motivation.
  • Safe Working Conditions: Safety should be a top priority in the construction industry. By investing in safety measures, training, and equipment, you can reduce workplace accidents and the associated costs of workers’ compensation claims and potential legal issues.
  • Efficient Equipment and Tools: Outdated or malfunctioning equipment can lead to delays, increased costs, and employee frustration. Investing in well-maintained, efficient equipment reduces downtime and boosts productivity.
  • Employee Involvement and Feedback: Involve employees in decisions that affect their work. When employees feel that their voices are heard and their opinions matter, they are more likely to stay with the company.
  • Effective Communication: Effective communication within your construction team can prevent costly mistakes and rework. Invest in tools and practices that facilitate clear and efficient communication among your employees.


Effective cost management is essential for the success and profitability of construction fleets. By leveraging FMS and other fleet and business solutions, fleets can build a comprehensive cost analysis and make data-driven decisions to successfully navigate challenges like inflation while ensuring sustainable pricing. 


By investing in and retaining employees, construction companies can build a skilled and loyal workforce that significantly contributes to cost savings and long-term success.  


Rachael Plant
Rachael Plant

About the Author:

Rachael Plant is a content marketing specialist for Fleetio, a fleet management software company that helps organizations track, analyze and improve their fleet operations. For more, visit

Modern Contractor Solutions, October 2023
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