Opportunity Cost In Construction

Time is our most valuable asset. This adage resonates more as we get older and have less of it. The way we utilize time is a determining factor in both our success and overall happiness.  Opportunity cost is the value of the next-best alternative when a decision is made; it’s what you give up. When making decisions regarding our daily activities, it is important that we are able to quantify these unseen costs.  

Time management is important in any business, but it is essential to be successful in the construction industry. Projects that take longer than expected add additional costs and decrease customer satisfaction. Therefore, we must take opportunity cost into account when making decisions.

Let’s look at an example from the construction industry: 

Continental Roofing started a new re-roofing project. This size job would typically take one day so the upcoming schedule has been based off of this information. Water damaged sheathing was exposed and additional materials were required for repairs. The estimator did not anticipate this amount of unforeseen damage. What are our options?

Option 1: The project manager can go get the materials and deliver it to the jobsite. He is, however overseeing a difficult project across town that requires his guidance and supervision. The opportunity cost therefore, would be not having his expertise on the more difficult project.


Option 2: A member of the roofing crew could leave the project to pick up the additional supplies. Taking one of the crew members off of the job could potentially slow the project down and delay the next scheduled project. In addition to this lost production time, there are monetary considerations such as additional wages and fuel cost. The loss of production time and the added expenses combine to determine the opportunity cost.


Option 3: The estimator could go pick up and deliver the materials, but this would cost him the opportunity to prospect and potentially close more business.


A New Option

Blue Fetch is a mobile application designed to give you an additional option allowing you to maximize time. On demand delivery of forgotten or unforeseen building materials keep your employees in the field where they are needed the most. Instead of chasing down materials, Fetch allows you to spend more time expanding and managing your business or taking some time for yourself.

What is time worth? In order to calculate opportunity cost, you must answer this question for each person in your organization including yourself. As you think about your options to get materials to the jobsite, remember Blue Fetch will be here when you need us.

Scroll to Top