WHY DO CONSTRUCTION PROJECTS GO OVER BUDGET?
Renovation budgets and construction project budgets are difficult to manage and keep within their original confines. As a project progresses, you find yourself with emergencies, accidents, new additions, and potential surprises at every turn. Creating a project budget is already tricky without anticipating the number of obstacles you’ll encounter. If you know what to look out for, your life and budget become much easier to manage.
HOW MANY CONSTRUCTION PROJECTS GO OVER BUDGET?
Construction project cost overruns have become an industry-wide problem over the last few years, with only 31% of all projects coming within 10% of the original budget. When you factor in labor costs, scope creep, and other common factors that occur during a construction job, budget overruns seem inevitable instead of something that could be avoided. With so much project overrun, planning is more critical than ever to determine cost estimates, soft costs, etc.
Due to the competitive nature of contractor bidding, estimates may not have the most accurate information. Some contractors will try to pad their budgets and timelines to look like the best option. If you’re vigilant and already have a rough estimate of the budget and timeline you’d like to stick with, managing expectations won’t be a problem. Since the preconstruction phase is so important, you should always have a realistic deadline and cost estimate created before bidding even begins.
Design errors are another common occurrence that accounts for over 38% of all construction disputes. If the plans are incomplete or incorrect, the contractor will have a more difficult time getting the job done correctly, causing a cascade of problems. Proper project management prevents your general contractor from making mistakes and allows you to reduce or eliminate any errors from your planning process.
HOW TO MANAGE PROJECT BUDGETS
There are a few ways to manage your budgets. First, investing in project management software is a great way to prevent mistakes from occurring down the line. When everything you need is found on a central hub and can be accessed by multiple parties invested in the project, you can gain insights you might have missed and saved time and money on accidents or missing information that might happen later.
Since construction costs tend to fluctuate, take into account a certain amount of leeway on your budget. Have a minimum and maximum set, but try to have emergency funds if certain aspects get rocky along the way. Consult your construction manager on any foreseeable problems that the project could encounter and try to soft budget around them.
Budget management is all about factors like picking the right team members for the job. The contractor and architect will set up the framework, but if the team you hire aren’t trained professionals, you’ll encounter problems right from the start. Ensure your construction budget accounts for hiring a team that you can trust from a reputable company. It may sound like common sense, but penny-pinching on the team that will be doing the heavy lifting on the project won’t save you money in the short or long term.
When you need a team that defines hard work, experience, and dedication, Skilled Services has the services to save you money and get the job done right the first time. We excel at planning, preparation, and execution, setting the standard for any project you’ll start from then on. When you’re looking for one construction expert to help on your next project, contact Skilled Services.