Construction Project Budgeting 101
Maintaining a budget is difficult no matter whether it is tracking household expenditures or a multi-million dollar construction project. Sticking tightly to an agreed upon budget takes discipline, but it can be difficult on a large project where there are many fingers in the pie. While a construction budget should be seen as an evolving agreement between owner and contractor, it is in the best interest of all parties to create realistic budgets before construction even starts.
Project Budgeting 101
Project budgeting has historically been a difficult task, but new technologies such as cost estimation software are making budgets more realistic and thus, easier to maintain.
- Be Informed: Every project will have its unique constraints that will affect schedule and therefore, budget. Any condition that delays the schedule will impact and typically increase the budget. For example, a renovation of an occupied facility will need to take into consideration the daily operations of the project site which will require construction to be done in phases so as to impact the day to day business as little as possible.
- Be Realistic: Getting a realistic construction estimate from the outset will make your project budgeting more accurate. While the architect is a critical component of your design team, he or she is not in the best position to provide a true market rate estimation of construction costs. Consider either involving your contractor early in the design process or choose a contractor that offers pre-construction services that include cost estimation.
- Be Comprehensive: Make certain that your budget will see your project through from the first brick to the final finishes. A popular method of making ends meet as budgets run wild is to borrow from the final site development budget which can leave you with a beautifully constructed building that seems unfinished from the parking lot perspective. Creating a comprehensive budget with an adequate contingency line item will leave you with a sufficient site development budget for the final exterior finishing touches.
- Be Flexible: You may find that an alternate delivery method best suits your project’s financing needs. The financing structure you employ may impact the delivery system you select. Traditional construction projects employed a design/bid/build system, but alternate delivery methods such as design/build and construction manager at risk systems have become popular as a way to guarantee a maximum price and create accurate project budgeting estimates from the beginning.
Project Budgeting With South Bay Construction Company
At South Bay Construction, we use cost estimation software to provide our clients with the most realistic cost estimation possible. Our pre-construction services include cost estimation, value analysis, scheduling, and procurement services. As a leader in the South Bay area construction industry, we make it a priority to deliver high-quality projects on time which all starts with a comprehensive, accurate budget.