If you’re planning on building a project, it’s important to define your construction budget to make sure it does not go over budget. If you set out a successful budget, you’ll be able to predict problems long before they get out of hand.
Here are five ways to help you build a successful construction budget:
1. Find Your Labor Costs
If you’ve done projects like this before, you know that it takes a lot of labor to get a job off the ground. Ask any business owner and they’ll tell you that labor costs are one of the biggest expenses they have to deal with. For anyone who has built construction projects in the past, it’s easy to scale up your efforts on paper and make a labor estimate.
You’ll have dozens of labor costs to think about when you’re working on a major project. Large-scale projects have elements to be created on-site and off-site as the building is constructed.
There are needs that exceed expectations if you end up needing workers with special training. The costs of recruiting, hiring, and training also add up and take from your budget. If you don’t know the costs of hiring workers, you could end up overpaying.
Before you create a direct labor cost, you need to vet all of your workers. While some positions don’t require much training, you’ll need people with years of experience to cover other positions. Welders, plumbers, and electricians all require a lot of knowledge and experience.
2. Add Up Your Materials
Once you’ve figured out how many workers you need, you need to figure out how much material you need. While this might seem like a difficult task, figuring out your costs as accurately as possible will offset your labor costs.
Keeping your material costs minimal might lead to buying cheap or low-quality materials that don’t last as long as they should. You should buy the right grade of materials based on what your project needs. When you spend more on materials, you’re able to sell your project for more.
With a lot of materials, you need to find ways to lower other costs to keep your project under budget. Reducing costs is challenging if you don’t have your materials extensively outlined in advance.
3. Add Up Travel Costs
Every project has a lot of costs associated with it beyond the obvious elements of labor and material costs. Failure to prepare for these elements in advance is what usually leads to overspending and problems with budgets. One of the costs that people fail to plan for is the kind of travel costs associated with a large construction project.
If you have a project that’s far from where your office is, you’ll need to make frequent trips. If you need to take flights or send your staff out to look at the project site, you’ll need to prepare for those costs. That could be an unexpectedly large addition to the budget.
When you’re traveling to meet with upper management all the time, see if you can substitute some of that meeting for teleconferencing. Video conferencing could save you a lot of the money you’d spend on traveling.
4. Think About Equipment and Real Estate
If you haven’t set up a local office, you’ll probably need one that’s near the construction site. You need to have a project office for every major site you’re working at. You also need to fill that office with staff and equipment.
You’ll need to have someone who is knowledgeable to field phone calls with questions about your project and about jobs on site. There is also the need for insurance when you’re paying for any kind of office where your staff works. You’ll need your employees covered as well as the building itself in case you’re liable for any issues.
You’ll also need to have insurance for the site itself. These costs are going to add up when you start factoring in your office equipment and how much it costs to maintain everything.
5. Need Special Equipment?
Every project has its own specific needs. They’ll require you to invest in special equipment to handle some elements of your project. Whether you buy or you rent that equipment makes a difference when it comes to your budget.
If you think you need equipment, that needs to be a part of your budget. Large projects incur costs within it comes to equipment, fuel, and maintenance. Define those elements in your budget in order to get a better idea of what the costs are.
Your labor estimates should clue you into what kind of equipment you need. The more specially trained staff you need, the more special equipment needs they’ll have.
Your Construction Budget is Your Roadmap
When you put together a strong construction budget, you ensure the success of your project. If your next project is going to be high-tech, check out our guide to ways technology is changing construction.