Reasons Why Bills of Materials are Important For General Contractors and Subcontractors

January 1, 2000

Reasons Why Bills of Materials are Important For General Contractors and Subcontractors

Imagine someone trying to make a cake without a proper recipe . It is the recipe that provides the list of ingredients, along with specified quantities required to make the cake. It entails specific instructions on how the ingredients are to be combined, baking temperatures, cooking times, etc. Without a full recipe, the cake is likely to be a flop.

Similarly, every construction project requires a list of different materials required to complete a project successfully. This list, known as the Bill of Materials or BOM, allows the efficient utilization of material, labor, and equipment. The exercise of defining a detailed list can be broken into different phases for large-scale projects, but it is incredibly helpful in avoiding many common problems pertaining to insufficient order quantities, out-of-stock situations, and other factors leading to delays in project completion. BOMs also assist with defining the project's overall costs.

Benefits of Effective BOMs

#1- Bill of Materials Help Boost Efficiency

The primary benefit of BOMs is that they help identify all the inventory stocks, including subassemblies, raw materials, and components needed to complete the project successfully. Therefore, BOMs help to ensure greater and much more efficient inventory control.

#2- Bill of Materials Help Reduce Waste

Bill of Materials helps to determine avoidable waste. Once they have complete knowledge about every component needed in every step of the construction process, the operations teams can make proper trade-offs between cash flow, time, inventory control, labor, and so on, throughout all stages of the construction project.

#3- Bills of Materials Help Manage Production Costs

BOMs are useful in identifying the basic costs of labor and material needed. Once these are known, contractors can identify the most cost-effective way of completing the project on time.

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