Construction projects are generally known for their longevity and perplexity in building time that can significantly lead to overbudgeting. This type of project includes various tasks, stakeholder considerations, and tons of moving parts. As numerous parties are involved in the project, there can be enormous possibilities of applying specializations and changes to the project. This only shows that many factors lead the project to exceed the set budget.
As a contractor, how can able to solve it? Read this blog to learn the eight golden rules that can help you control your project budget.
Why Staying on Budget Matters in Construction Projects?
As a contractor, the project budget is one of your biggest challenges. It is clear that you do not want to go over the budget. You do not have the intention to surpass it. Yet, projects inevitably take many turns. While you can control anything related to staying on project budget, your reputation often depends on how well you managed the budget itself.
Ensure you and others involved are hitting the targeted budget. So, here are the four critical phases of construction budgeting that you and your team have to follow apart from the golden rules.
Phase 1 – Analysis and Discovery
Start by creating a team since it takes more than two people to plan a budget. The lineup of your construction team often depends on your company’s structure and size. It may include other members outside. A deep understanding of your company’s whole cost structure is crucial. Hence, make sure that at least one member of your team is well-trusted to represent that perspective.
Your funding of the project has to be secure and well-established.
Phase 2 – Design and Development
During this phase, you have to determine the possible scope of your project. After you analyze the potential work, ask your team to develop creative options and pitch them with models and drawings. All decision-makers and stakeholders must be aligned on the final design before you begin.
Once there is a sign-off, create a list of all necessary materials, and do not hesitate to ask for help from others for second opinions. You can seek advice from outside consultants. Having someone professional to provide you an estimate for the entire project enables you to evaluate bids from various contractors, which is very helpful. By the end of this phase, make sure to:
- Finalize your timeline and budget.
- Start seeking bids from any potential contractors.
- Ensure that contractors have finalized and completed all necessary requirements for the bid.
Phase 3 – Documentation and Pre-construction
Once you power through the development and design phase, you have to secure approval of the finalized budget and design. And when the final sign-off comes, ensure that you and other decision-makers involved understand the project. Everyone is expected to move forward with it.
Have a meeting with all stakeholders (architects, contractors, utilities, etc.) to discuss the construction project, assess any possible issues, and work closely to resolve each. For a more collaborative environment, deploy cloud-based technologies. It will help everyone stay on the same track, but it also reduces possible risks from start to finish, keeping the timeline and budget under the line.
Phase 4 – Construction and Closeout
Actually, building and closing out contracts is almost considered the longest phase of the project. Track the construction and ensure progress is keeping as near to your projected costs and schedules as possible. However, even the best-laid plans may encounter hurdles. Hence, keep a comprehensive change order log to determine when those changes need to be made and whether they are tracked and noted for the future.
For the final phase, use project management software to help you manage those steps.
Rules you can follow to Stay within the Budget
1. Set a Realistic Budget
It is crucial to make sure that your budget is realistic amidst the planning stage of the project. This includes determining many factors, like labor expenses, material costs, and fluctuations of the price in a particular location onsite. You also need to include a contingency aspect on the budget. Having to include this item allows you to have a smaller pocket for issues that typically arise while the project is set.
Confirm that your budget is realistic. It helps to prevent insufficient and unsafe work from happening on your construction projects.
2. Avoid Changing the Project Scope
If a problem arises, you must prevent changing the scope of your project as much as possible. This is critical since a minor issue may set a sequence of events, causing the project to derail from its actual scope completely. Suppose that you have created a realistic budget, including a contingency. The problem must be dealt with without changing the entire project scope.
In addition, maintaining accurate estimates is necessary while avoiding changing the scope of the project. Make sure to spend extra time to price out each part of the job and write down all your estimated contingencies. Customizing every estimate can also save you future headaches when project costs begin spilling over.
3. Make Your Construction Project on Cloud
The digital age is giving everybody tons of support for everyday work. It is highly suggested to use cloud-based project management systems to monitor and track every aspect of your business. There are amazing things this software tool can do, like keeping everybody involved in the project up-to-date. Designers, builders, subcontractors, architects, engineers can work on the same plan easily and consistently.
And in such cloud software tools and applications, contracts can be updated real-time too and costs can also be calculated during the construction by having everybody updated.
4. Opt for Proper Trained Workers
Choosing well-trained workers for your construction projects is a wise move. Skilled and top-notched workers might cost you more, yet they ensure that the work can be done accordingly with safety and few mistakes. So to complete your construction projects effectively, you must pick the skilled ones.
In fact, these workers are your most valuable asset. It is your responsibility to ensure they are well-trained in their jobs. Apart from making sure your workers are skilled, you need to provide them protective gear as well. Any accidents onsite can cost you tremendously. So, do your best to establish a culture of safety.
5. Get Ready to Pivot Whenever Plans Change
Building plans may change as many issues become more and more apparent. Anytime when building plans change, so should the contract. You cannot expect to stay on the budget for a particular plan that no longer exists. Make sure to add labor costs and new materials that are required due to these changes. Also, ensure the client is aware of the price changes they will incur.
Another area of budgeting that you need to consider under this particular rule is project design errors. Whenever you review building plans with designers, architects, and others, you must be looking for problematic designs. Addressing these elements early rather than later can keep your budget from creeping up.
6. Eliminate Waste
Wasted materials can add up and tip your project budget. That is why the saying, “measure twice and cut once,” is true to its meaning. The more precise and exact your staff uses the materials, the more you can eliminate any waste. It is your obligation to train your workers to use all the materials, without wasting it properly.
And by planning every detail out, you are sure to keep all budget and materials on track.
7. Manage your Site with Care
A worksite can be a space of clutter and disarray. Materials, construction equipment, and debris often dominate the site. However, proper management on your site helps you to stay on budget. You must ensure that your construction site is always organized and tidy. Just doing regular cleanup and monitoring material usage enables you to understand if you have sufficient materials fully.
Additionally, it keeps tools and equipment secure and clean. Do not let your job site become chaotic; it will be tough to gauge your inventory.
8. Worry about the Small Stuff
Being detail-oriented saves you money. While you always want to see the bigger picture, do not forget how small things can affect your timeline and budget. Hence, check on some little things like making sure there are enough screws. Something as little as this can impact your capacity to get the job done on time.
Moreover, a detailed perspective is also crucial in the management of a project. There can be many errors that may impact the overall costs. You and your team have to be on top of this. You need to always communicate with them to ensure there are no overruns.
Remember these eight golden rules to keep your projects under budget. By applying these rules in real-time, you can ensure that your construction projects are completed without any significant hits on the budget. As a contractor, explore everything you need to know about completing projects under a settled budget every single time.