Construction managers have to keep a very close eye on their budget. If there is a change in order of $10,000, it means that you will end up with $10,000 less profit you would have collected otherwise at the end of the project. Whether it is because of an increase in cost of material, a schedule delay, or a breakdown in the equipment, construction budget going awry is one of the biggest challenges that managers deal with. In order to avoid the top construction budget mistakes, you have to be aware of them. What are they? Check some of them out below:
Making inaccurate estimates
A lot of construction budgeting mistakes happen during the project estimation phase. If you don’t define budgets and projects properly, you will deal with a lot problems in the middle of the project. The issue is that a lot of clients choose a contractor based on the lowest bid, which results in poorly thought-out and inaccurate estimates. Therefore, you need to resist the urge to rush through an estimate or low-ball it deliberately, even if it gets you a client in the beginning because it will destroy your reputation in the long-run.
Making mistakes in the project design
If you have a flawed design, your project estimate is irrelevant. You won’t discover design problems until you are very deep into a project, so it is best to double and triple check. Project designs can result in disagreements and lawsuits about the kind of work that’s expected.
Not accounting for surprises
One of the biggest reasons behind budget overruns are changes and surprises in the project. This can be a fatal error, as far as the budget goes. Regardless of how well-designed the project is or how well you have communicated with the client, there will come a time when they will tweak the design. No matter what changes they want, Patrick Shin owner of Nan Inc. says that you have to have a plan in place. Always leave some room for changes and make sure your client will accept financial responsibility.
Running into delays
There are hundreds of things that can delay your project. It could be a permit process or a government approval taking too long or late shipment. Time is money when it comes to construction, so delays are a major problem. For instance, if the project doesn’t start on time, your labor is sitting idle and you still have to pay them. Moreover, there is also a possibility that there are some incentives tied in your contract for finishing your work on time and a delay could wipe those out. Always have contingencies in place to avoid delays that can cost you.