While it is extremely common to hear about budgeting for your construction project, it is less common to know precisely how important construction budgeting is. Not only can budgets help to provide a great many benefits for your project, but it is an integral piece of ensuring the construction project is completed according to plan.
Construction Budgeting Importance
Without a budget, it will be exceedingly difficult to plan for the costs, both expected and unexpected, that come along with a construction project. Here are a few things that you need to know about the importance of construction budgeting for your project.
Reasons Projects Often Go Over Budget
Construction projects are notorious for going over the designated budget. It is important to understand the common reasons that this occurs so that you can prevent this from happening with your specific construction project. Poor project management may cause your construction project to go over budget. Due to this, it is critical to have an excellent project manager to oversee the various aspects of your project.
Inaccurate project estimates often lead to the project going over budget, because these estimates didn’t accurately portray the costs involved with the construction project, it will likely go over budget. Design errors may also lead to the project going over budget, because they often result in errors having to be rectified. Proper communication is another important step in preventing your project from going over budget. This will ensure a far more efficient project.
Important Considerations for a Construction Project Budget
When a budget is designed for a construction project, there will be several different aspects that will need to be included. One important consideration is to incorporate a contingency allowance into the budget. This allows you to account for the possibility of costs that you didn’t initially foresee. You should also ensure that costs for construction of the exterior, foundation, and HVAC system are all accounted for in the construction project budget. A thorough budget should also include the costs for various fees, insurance, and necessary permits.
5 Reasons Why Construction Budgeting is Important
- Saves Time and Money
- Prevents the Project from Getting Off Track
- Sets Priorities
- Thorough, Efficient Planning
- Cost Estimation
Hard and Soft Considerations
The costs that are incorporated into a construction project budget are generally sorted into two categories. The first category is called “hard expenses.” This category includes things that involve physical construction costs, such as materials, labor, and equipment rental expenses. The other category is “soft expenses.” These expenses can be rather difficult to account for because they are less tangible. Soft expenses include costs such as obtaining insurance, interest from loans, and taxes that may apply to the construction project.
Saves Time and Money
A construction project budget is incredibly important because it can help to save time and money throughout the duration of the project. When you have planned appropriately for the construction project, you will be able to take the steps to ensure that the project stays within the budget. When you are unable to compare actual costs with projected costs, you will have no way of measuring the efficiency of the project. By creating a carefully constructed budget, you will be able to manage the project.
Prevents the Project from Getting Off Track
When you must adhere to a budget, you will be able to keep the project on track. Too many projects are unable to be completed due to the project having expenses that were unaccounted for. By creating a thorough budget, you will be able to account for these expenses and prevent the project from getting off track. Projects with an effective budget are far likelier to be seen through to completion.
Sets Priorities
By creating a budget, you will be able to identify the specific priorities for the project. This will help you to make decisions and ensure that the construction project is completed efficiently. When you have identified the appropriate priorities, the management of the project will be far more effective. This is an important step in ensuring that your construction project can be completed as intended.
Thorough, Efficient Planning
Planning is a critical step in a construction project. Any construction project requires a great many factors coming together in order to create the finished product. Without the appropriate planning, it is far more likely that problems will arise and that something will be missed in the construction process. When you take the time to create a budget, you will have to plan effectively for the construction project.
Cost Estimation
In order to execute a construction project, it will be important to understand the costs that are associated with the construction project. This will be critical in procuring funding and ensuring that the project can be completed according to your expectations. Without a proper budget, you will be unable to obtain any estimate of the costs of your construction project.
Our team at E.K. Bailey offers an array of pre-planning services to ensure that your construction project can be completed according to plan. We can help you to identify the appropriate budget to ensure that your construction project can proceed unhindered.
To learn more about the importance of construction budgeting for your construction project or how to plan for your project, contact us at E.K. Bailey today!