Going over budget is one of the biggest challenges that many construction companies face. In fact, research has revealed that almost 70% of projects exceed their budget by at least 10%, including high-profile builds such as The Millennium Dome, The Olympic Stadium, The Shard, and ‘The Holyrood Project’. Read on for the importance of budgeting for a construction project.
There are a number of reasons why construction companies may find it difficult to stick to their original budget. These range from problems with the initial compiling of the budget in the first place, perhaps caused by inattention to detail, or lack of care; communication issues during the project itself; and, of course, unforeseen events that cause hold-ups and perhaps even damage to the site.
While the latter, unfortunately, can’t be avoided, there is still a range of measures that construction companies can take to help them avoid going over budget. But how effective are these measures really, and can they affect the end result of a project? Let’s dig deeper and find out, starting off with the benefits of sticking as closely to a budget as you can.
Why Budgeting Is So Beneficial
While drawing up a detailed budget for each project takes a significant amount of time and effort, not to mention a mind-boggling assortment of calculations and projections, all of that hard work will be worth it in the end. This is because a good construction budget brings a slew of positive effects in its wake. Not only will careful (and flexible) budgeting ensure that you have enough funds for every aspect of the build, but it will also help to make sure that you complete the project on time.
By preparing a budget, you will have a clear understanding of where your money is going, and by continually auditing your budget and assessing your outgoings, you will find it easier to avoid overspending.
Finally, having a carefully compiled and transparent budget also makes it easier for you to ensure that your clients have a clear understanding of the project’s assorted expenses, and its timeline, which will help them to have more confidence in your company.
How To Keep Your Spending On Track
One of the keys to preparing a successful budget is to make a careful estimation of all of the costs associated with the project. To help construction business owners calculate the most accurate estimates, the use of cost management software in construction is highly recommended.
Companies such as Kahua have rigorously developed construction project cost management software that brings a range of advantages, particularly when it comes to budgeting. These benefits include helping you to track and audit your project’s finances; control costs; and reduce delays and hidden expenses.
Make Provision For Potential Delays
Delays happen frequently on construction projects, and while many of them could probably be avoided, others are unpreventable. While you are drawing up your budget and planning each stage of your upcoming project, it’s important to consider which aspects of the build could be most problematic, and which would be most likely to cause delays or mishaps.
By making these kinds of projections, you will be able to set some money or resources aside in case a projected problem does occur. Some of the most serious potential mishaps you should do your best to avoid accidents or injuries to employees, and the accidental damage of underground utilities. Factoring things such as a buried utilities search into your budget can help you avoid a potentially catastrophic accident – saving you time and money into the bargain, and helping the project to stay firmly on track.
Communication Is Key
They say that many hands make light work, but if some of those hands don’t know what the others are doing, problems can easily pile up. Lack of communication on a construction project can lead to all kinds of setbacks – from disgruntled employees and contractors, to hold-ups with suppliers if you happen to quibble over the price of materials.
Ensuring clear, simple and transparent communication throughout every stage of the project will hopefully help to prevent any serious problems, and the unnecessary expenses that may come with them. It can also help you save money – for example, if you have dedicated time to building a rapport with certain suppliers, they may be able to help you out with discounts on bulk-bought materials, or maybe even extend your payment terms.
When it comes to finalising the details of your project budget, communication is also vitally important, particularly for the investors involved in the project. They will want a clear breakdown of all of the costs involved, as well as the time-frame, and they will probably also want to know what allowances you have made for anything that could go wrong.
By promoting clarity and transparency in every aspect of your project, including budgeting – and every member of your team- you will improve your chances of achieving a successful end result; not just for your investors, but for everyone involved.