Project cost overruns can even happen to the best of the best. However, this doesn’t mean that you should take this as an excuse and let your next construction endeavor blow your budget. Instead, you should make sure to invest in quality project management, devise a sound plan, calculate all the costs and be prepared for the unexpected. In order to help you out with this, we’ve put together a comprehensive list of various ideas and some advice on how to ensure that your next construction project won’t put your company on the verge of bankruptcy. Take a look, roll up your sleeves and get down to work. Good luck!
Set up your budget correctly from the start
Before you start thinking about all the details of your building strategies, you must be sure that your budget is set up correctly. So, the first step of every construction project should be a budgetary estimation which will then allow you to focus on further steps. This is an essential part of the process since if you skip it, it can happen that you underestimate the costs and end up going bankrupt in the middle of the construction works. However, don’t forget that no matter how precise you think your estimation is, always look for ways to increase your budget by 50% so that you have some extra funds in case of unexpected costs. After all, being well-prepared is the key to success.
Keep a record of small costs as well
We’ve already agreed that underestimating the costs can lead to various issues and can seriously damage your budget. However, most often, it’s not the underestimation that creates a problem, but the fact that we’ve simply forgotten to add in some seemingly small expenses. For instance, a pack of nails costs less to nothing, but when you add up all the packs that were used during the process, the total sum is no longer that negligible. So, if you want to be sure that you won’t go broke before you see the project through to the end, pay attention to all the details and factor in even the tiniest expenses.
Read also: Punch list for construction – The ultimate guide
Monitor your expenses over time
So, you’ve calculated your budget, multiplied it by 1.5 and now you think that your job is done. Well, not really. No matter how precisely your team of experts managed to estimate the construction costs, you need to continue monitoring the expenditures all the time until the project is completed. This is especially important if your clients make certain alterations or want to opt for some upgrades along the way. On top of that, remember to warn them that these upgrades can add up pretty quickly and end up costing them a small fortune. Finally, in order to make this monitoring process easier, don’t forget to keep a clean record of all the expenses since this can also be useful for your future construction projects.
Anticipate possible project changes
As we’ve already mentioned, you need to monitor your projects closely over time and be aware of all the possible alterations. After all, many experts believe that these changes are the biggest reasons why so many construction endeavors go over budget. However, this isn’t necessarily correct. While it is definitely true that these alterations do make a huge difference, the problem doesn’t lie in them, but in the company’s failure to predict such events. So, instead of trying to prevent these changes, try to look upon them as the expected extensions of the initial plan and think about all the ways how to handle them in advance.
Plan for some possible issues
Once the project has started, we all tend to look on the bright side and believe that we won’t come across any serious issues and delays. However, in reality, not everything is that easy. Therefore, instead of letting some minor setbacks frustrate you and prevent your projects from being finished on time, you should plan for them in advance. In other words, you should try to foresee some common issues like a delayed shipment of materials and come up with possible solutions to them. Additionally, don’t forget to allocate enough funds for these emergency situations as well, so that you don’t have to cut down on your construction budget and be forced to opt for less favorable solutions. Remember, being objective and capable of predicting possible issues are just some of the key characteristics of a reliable construction firm.
Keep the communication in your team clear and open
Once you’ve hired professionals and assembled a trustworthy team, you should find a way to keep your communication honest and clear. One of the most efficient ways to achieve this is by holding regular weekly meetings which should be obligatory for all team members and where you will have enough time to discuss what has been achieved so far and what needs to be done in the future. Additionally, these meetings can be a good opportunity for all workers to express their concerns and ask questions in order to clarify any possible issues. Of course, aside from discussing business, you can use these opportunities to boost your team’s spirit and build good work relationships. Owing to all of this, you won’t have any reasons to fear being surprised by unexpected problems which can lead to budget overruns.
Keep your clients updated
Finally, if you want to nurture trust and be assured that your clients are fully satisfied with your work, you need to keep them updated. So, instead of hiding some bad news from them and risking that they terminate the contract leaving you high and dry when they find out, be honest and respectful towards them. Lastly, keeping healthy business relationships with your clients will help your firm grow further and get more projects in the future.
As you can see, finishing a construction project without breaking the bank is absolutely possible. You just need to set up your budget correctly, monitor all the expenditures, develop good relationships both with your team members and your clients, as well as make sure to plan for possible changes and issues. Good luck with your future projects!
About the author: Derek Lotts is a Sydney based writer and researcher, a regular contributor at Smooth Decorator blog. He writes about décor, gardening, recycling, ecology, and business. He thinks all of these topics fall under the self-improvement category. He believes in the power of sharing ideas and communicating via the internet to achieve betterment. You can follow Derek @derek_b_lotts!