5 Strategies for Keeping Your Budgets Under Control

Sometimes builders sacrifice construction quality to keep a budget in check. Unfortunately, this can jeopardize a construction company’s reputation and leave it vulnerable to potential lawsuits. To keep your projects under-budget, consider these tips for managing construction costs.

Expect changes in scope. Most experienced builders have endured scope creep at some time or another. The scenario is usually the same: a project is humming along without issues, then it begins to grow larger and larger while the price remains stagnant. This usually occurs when a client expects any extra work to be included in the original price. In other instances, clients may simply fail to realize they are requesting more than they agreed to at the outset of the project. Make sure to keep tabs on any scope changes and create change orders to authorize additional funding for any extra work beyond your original agreement.

Always look forward. It’s common practice for builders to create budgets at the outset of a project. To keep costs down, however, it’s important to take a step back every so often and re-forecast your material and labor needs. Regular budget oversight can go a long way toward keeping costs in check. More often than not, projects without frequent reforecasting will result in budget issues and building delays. Builders should always be updating and managing budgets, even when projects are running smoothly. If you aren’t continuously forecasting your budget based on shifting circumstances, you are inviting trouble.

Re-forecast resource needs. In addition to preparing for shifting budget issues, you should also be monitoring your material and labor needs. Ideally, builders should have project managers who consistently evaluate the number of people working on a particular project. In some instances, you may need to thin your workforce as a project winds down. In other situations, you may need to temporarily increase your team to beat an impending deadline. Mishaps, scope creep and inaccurate estimates can also lead to increasing material needs. Whatever the case, you can avert a budget crisis by staying in front of these issues with a consistent re-forecasting strategy.

Talk to your team. Poor communication is one of the biggest causes of budget problems. Be sure to talk to your team to get a clear assessment of where the project stands and where it is heading. Not only will this help you accurately re-forecast your budget and materials needs, it will encourage accountability and productivity. You can create a positive flow of communication by using a collaborative work management (CWM) tool. By syncing comments, calendars and attachments, you can monitor budgets, updates and scheduling changes in real time.

Know when to spend. It’s natural for budget-strapped builders to look for ways to reduce costs on the job site. When they cut corners, however, construction companies often end up paying for it later. A solid framework and quality materials significantly reduce the chances of expensive structural problems in the future. It can also reduce your risk of liability problems and dings to your reputation. When they choose to spend more, builders often save more, because they only have to do each job once.

 

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