By Jessica Kirby
The construction budget is arguably the most important component of the project—stick to it, and the company earns revenue; fumble it, and the project may not even complete. Good budgeting means solid best practices in risk evaluation, estimating, and project communication.
A robust technology solution that connects all departments in a contracting company can help mitigate any upsets that occur during the budgeting or construction processes. Let’s look at three common budgeting mistakes, how to avoid or mitigate their consequences, and how technology can help.
Miscalculation of project costs.
Budgets that fail to estimate the initial costs might be doomed from the beginning. Deciding the budget and schedule early and accurately can help avoid issues later in the project. Even though the lowest bid will likely get the building owner’s attention, resist the urge to lowball. These measures will always catch up with you, doing far more damage to your company’s reputation when the actual costs surpass the estimate.
How tech can help:
Standardizing the estimation process is the best way to collect accurate, comparable data. Digital estimating brings all relevant data together—labor, materials, and time—and allows you to view and assess the project plans electronically. This reduces the resources required to create an accurate bid and the possibility of errors. As a bonus, historical data can help you understand your bid win to loss ratio and other trends so you can fine tune your process.
Inadequate planning.
Rushing through the planning phase is almost guaranteed to result in budgetary mishaps. This is the time to identify construction design flaws that affect your scope, permit delays, circumstances that may cause scope creep, or labor/capacity deficiencies. Failure to identify these issues can at minimum blow the budget and at worst result in disagreements and even lawsuits.
How tech can help:
The right technology solution is robust in its internal communication function, so you can consult with each department and departments have accurate information when consulting with the building owner, engineers, and other trades. Calculating labor capacity can help ensure no one will be over-burdened, and having access to features like the ability to upload blueprints and draw over them electronically will help identify and anticipate risks.
Poor communication with stakeholders.
Communication errors can lead to misunderstandings, budget overruns, and significant project delays. It is essential to prepare and share detailed documentation of scope, project goals and deliverables, timelines, and cost information early. Never rely on verbal agreements.
How tech can help:
Besides providing a detailed paper trail, your construction tech solution should update all related fields as change orders occur. Streamlined internal commuication will keep teams connected and armed with up-to-the-minute data. Consider a provider with flexible scheduling and delivery capability to manage timelines and mitigate delays.
Controling your budget
If budgeting becomes a constant or repeat issue, it might be time for stronger measures to help you feel more confident in your budgeting decisions.
- Consider increasing the amount of time you spend on project planning by 50%. You can always decrease that if the process becomes smoother.
- Get a second set of eyes—like a project manager or fabrication lead—to look over the plans and watch for oversights.
- Consider getting professional help, such as a lawyer with experience in the construction field.
Learn more about what kind of data you could be collecting to perfect your budgeting habits at buildcentrix.com ■