Construction Budgeting 101

All, Miscellaneous, Project Management & Advisory

Project cost overrun is a common dilemma in Project Management. Let’s look at a few comprehensive ways as to how to invest in quality project management, develop a sound plan which incorporates all the costs and at the same time give flexibility to the unexpected expenses.

 

Accepted Cost Estimate:

The first step to any construction project is a budget estimate which gives you a cost guideline for the whole project. This is a mandatory step for every project which begins with the submission of a Bill of Quantities (BOQ) -  a document that provides project-specific measured quantities of the items of work identified by the drawings and specifications in the tender documentation. Post the total calculation of the budget via the BOQ, increase it by 10%; this is to incorporate the unexpected costs.

 

Project Schedule:

A project schedule indicates what needs to be done, which resources must be utilized, and when each task begins and ends. In short, it’s a timetable that will establish milestone dates for all aspects of the project including all entitlement approvals, permitting, completion of design phases, construction start and finish dates, as well as operational handover and soft launch. The schedule should include an early purchasing strategy for long-lead items which takes into account the time required for manufacturing, shipping schedules, warehousing, etc. This is the second big step in regulating your budget to match the timeline of the entire project.

 

Record and Monitor:

Record all your costs, even the smallest expenses. For e.g. a cost of a bag of nails may seem minimal but when multiplied with several bags it may not look negligible. Use a budgeting tool to accurately determine the cost and track the expenses, this will be a huge aid in data entry as the process shall get streamlined eliminating redundant tasks. Monitoring expenses is more helpful when the clients tend to add changes or want upgrades considering these changes might look simple in the beginning but end up costing more at a later date. And a detailed and precise record of expenses will also be helpful for your future construction projects. 

 

Technology:

Project Management Software, Augmented Reality (AR), Building Information Modelling (BIM), Data Automation, Green Construction are direct tools that are helping in a huge way in improving efficiency and also reducing the costs in the long run. For e.g. A project management software helps you keep a track of an employee’s working hours and it also gives you an alert when an employee is close to getting an overtime payment; the accuracy of this helps in controlling the working hours of the labor hence regulating the costs.