Managing Your Construction Budget

Managing a construction project requires you to keep several balls in the air, controlling an occasionally-unpredictable process from its inception all the way through its completion. One of the big variables is budget. Costs can sometimes rise or fall due to a variety of circumstances, but a good project manager is able to exert control and ensure that the project is completed without going over.

What can construction project managers do to regulate their costs and stick to the budget? Here are some best practices, general principles, and rules of thumb.

Guidelines for Staying on Budget with Your Construction Project

It Starts with a Schedule

The first step, before construction begins, is to ensure you have a schedule in place, allocating the resources necessary for each step of the construction process. Do your due diligence in determining what labor and materials will be needed for each step in the construction, then estimate how much those things will cost. This might sometimes require the input of specialists, such as engineers or subcontractors. Arriving at a general, over-arching budget for the project is necessary, and it will always be tied to the steps in the construction process itself.

Automation is Key

It will be very important—but also a little taxing—to keep track of costs as you incur them. One way to manage this is to use a budgeting tool. There are a number of apps available that will effectively automate the process, allowing you to keep tabs on ongoing costs and to adjust or tweak your budget on the fly. These apps can also allow for collaboration, ensuring you and your colleagues are seeing the same numbers, and eliminate redundancies in the data input process.

Make Use of Cost-Cutting Technologies

You probably know the old saying, measure twice, cut once. Well, along the same lines, by being meticulous in your planning, you can ensure that you estimate costs correctly the first time, and prevent costly errors or mistakes. And there are a number of valuable new technologies that can assist with this; BIM and virtual reality both eliminate costly rework and help you keep your budget on track.

Monitor Labor Productivity

Once you’ve made the schedule and set the budget, that doesn’t mean your work is done. Actually, the project manager plays an important role in monitoring daily activity, and in particular monitoring labor productivity. Labor hours and overtime can eat into your budget, so make sure you have a system in place to track employee hours and minimize the need for overtime pay.

Set Expectations

An important aspect of the budgeting process is setting expectations. It’s important for project managers to under-promise and over-deliver, being aware that very few construction projects ever go quite according to plan. Even a few days of inclement weather can throw your budget way off track, so make sure you factor that into your initial planning. In fact, many construction experts say that you should allocate 10 percent of your total budget to unexpected costs. Hopefully, you’ll shoot high and come in low—and wow your clients, in the process.

Maintaining Your Construction Budget

The project manager cannot ultimately foresee every event or every unexpected factor that shapes the construction process. What the project manager can do is try to be open and flexible while exerting rigorous control over daily expenses, seeking cost-cutting opportunities along the way.

That may sound like a tall order, but it’s more than possible to complete a construction project under budget, without any sacrifice to quality. In fact, Encompass Building Group does it all the time. We’re diligent in project management at every step of the way, and are proud of our ability to deliver results that conform to clients’ budgets.

To learn more about our approach to construction management, reach out to Encompass Building Group today.

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