For a construction manager, keeping a project within budget is often difficult. With many unforeseen costs or delays, it can be difficult to project costs from the start. However, to start a new build, a financial plan has to be in place, and an estimate of a budget is part of this.
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Building a Construction Budget: What it is and Where to Start
The construction budget refers to an exhaustive financial outline that represents the projected expenses for a construction endeavor. It acts as a roadmap throughout the construction process, aiding in resource allocation, expense control, and ensuring adherence to financial limits. Within this budget, one usually accounts for labor costs, material expenses, equipment charges, permit fees, overhead, and other pertinent financial outlays. This budget is a fundamental component of the overall construction project plan.
Why Is Budgeting Such an Essential Part of a Construction Project?
Having a well-planned construction budget is essential for a few reasons, such as controlling costs, assisting in decision-making, and having clear communication between all parties involved in the different processes of the build.
What Is the Goal of a Construction Budget?
Construction companies often don’t have infinite amounts of money to put towards projects and will rely on the money of investors and financial institutions. By budgeting, the project manager will be able to make informed decisions based on the amount of money that is available and what the expectations are.
Having Clear Communication
By having a project manager who also handles construction funding management, third parties like stakeholders and the client will have a clearer form of communication. The project manager will be able to tell the stakeholders exactly where their money is going and what it is being used for. Having transparent communication with investors or stakeholders is one of the best ways to actually secure investments.
Keeping Processes on Track
A well-planned construction budget is often divided between the different phases of the construction itself. Each phase will have a detailed list of costs and materials that are needed to complete that phase of construction. By having all these expenses pre-approved and written into a financial plan, the chances of delays from unaccounted expenses will be lowered.
Risk Management
In preparing a construction budget, it’s crucial for teams to consider various risks that might financially affect the project. Allocating a portion of the budget is necessary to either mitigate these risks or address their financial consequences on the project. This proactive approach helps safeguard the project’s financial stability.
4 Ways to Connect Your Construction Management to Your Budget
As a project manager, connecting your construction management to your budget is an important step.
Keeping Inventory Low
The construction manager will have to list all the resources that need to be used in the different parts of the construction undertaking. However, not everything needs to be bought at the same time. A good construction project manager will be able to keep the inventory of materials as low as possible without the risk of delaying any of the deadlines. Whenever certain tasks are done, new materials can be ordered for the next phase of the project.
As the project manager, it will be your responsibility to keep the necessary materials ready and available, but you will also need to make sure that resources don’t get wasted! This will also reduce the risk of exceeding funding constraints by having too many materials that don’t get used.
Using Software Solutions for Project Management
One of the best ways to connect your project management to a construction budget is by including software solutions that will help you manage the building project. These expenses will be an investment since you will be able to do your job a lot more efficiently.
Project management software will help your teams be more efficient through the use of real-time data, and connectivity between the field and the office.
Track Your Spend
It is essential for a project manager to consistently monitor the project’s financial resources during its entire duration. Maintaining an overview of the budget is crucial, even when tasks are progressing as planned. This involves comparing incurred expenses against the budgeted amounts. By doing so, the project manager can make informed decisions about redistributing resources or revising the project’s financial plan, ultimately benefiting all stakeholders.
Keep the Project Plan Up-To-Date
With construction project budget management it is necessary to keep these budgets up-to-date. You can choose to update the fund allocation after the completion of each phase. It is also important to update the document when there are accidents that cause delays or have a financial impact on the whole project! Furthermore, you can adjust even positive impacts like lower building material costs.
Get help with budgeting for construction management
From labor, materials and regulatory costs to all the unforeseen pitfalls through the project, everything has to be included in a construction budget.
Reach out to us to learn more about how Trimble ProjectSight can help your project management teams do their jobs the right way.
