As with any business project, one of the most important things when developing a construction site is to ensure is that it is completed within the allocated finance budget.
Whilst unavoidable or unforeseen issues may be encountered, many things can be done to keep projects on track in terms of both timescale and budget.
If the budget is not met it can impact greatly on the company’s bottom line profits which is not a scenario that anyone wants to happen.
Here are six ways to ensure your construction project is completed within budget.
1. Be realistic and include a contingency
It is important to be realistic from the outset and set an achievable budget. If you don’t, then it’s a fairly pointless exercise.
Obviously, you may have to work within certain financial parameters to make the project profitable, but being realistic is essential.
You may encounter a few bumps in the road as the project progresses, so it’s wise to include a contingency. It will give you a bit of wriggle room should it be needed.
If you hit an issue and have no way of financing a resolution, your project may need to be mothballed which will prove costly so a contingency will lower the impact of any issues that may arise.
2. Stick to the building program
Encountering build delays can greatly harm the finances of the project.
If you run over the program, sub-contractors may need to be paid for hours that have not been budgeted for and if delays are substantial, they may even walk off of a job because it’s impacting their business too.
A construction pre-start meeting should take place with the technical team and engineers to establish if there are any uncommon issues, such as land contamination, that need to be addressed before building works can commence.
Discussions should also take place with groundworkers to establish the timescales they believe may be needed in order to carry out the necessary works.
The building program should then be drafted and further discussed before being finalized. This will ensure that it is realistic from the outset.
Many construction directors will add a few weeks contingency into their build programs to allow for minor delays which may be encountered as the job progresses.
Staff can make a huge difference in whether a project runs to or exceeds the budget.
If you don’t have the right staff with the right experience it can cause a host of issues. Whilst all personnel are important to running a successful development, the site manager is probably the most so.
When looking for a site manager, establish if they have had experience with similar projects before.
If, for example, they are used to managing the build for bog-standard villas and bungalows, and you are creating a development of commercial office buildings, then they may not necessarily be right for the job.
Whilst many factors are the same regardless, certain jobs require specific skills. Build programs can be very different depending on what is being developed.
Make sure your site agent is experienced in that field and it will make sticking to budget far easier.
In terms of other staff, it is important that you get the right number of people on the job to accommodate the program.
Whilst this will involve a larger outlay in terms of salaries, it will make delays less likely and thus, you are more likely to meet your financial goals for the project.
Training is also very important. Well trained staff will work more effectively and get the job done accurately and efficiently the first time.
4. Time tracking
There are many time tracking programs available that can help to ensure construction projects run to budget.
Staff effectively clock on and off allowing you to better gauge how much time each project element has taken.
This allows an analysis not only of whether the staff is working effectively, but whether your programs are accurate from the outset.
As this information can be analyzed on a bigger scale or for very detailed elements, it can be very useful to use for future projects too.
You can learn what is taking more time than expected and make changes to speed up processes and make things run more smoothly.
5. Construction material procurement
Your site manager must ensure that materials are being called off ahead of when they are needed.
The last thing you want is a kitchen fitter or tiler turning up on-site and the necessary materials not being there to allow them to do their job.
Similarly, you should ensure that fuel stocks are replenished regularly. Buying diesel in bulk and housing in fuel tank bunds is essential to ensure that construction machinery can be refueled as and when necessary.
Delays can cost you money and potentially ruin professional relationships you have with your sub-contractors.
If your site manager is ordering materials directly, commercial teams may need to sign these off before the suppliers will fulfill the order.
A good relationship between a site manager and your commercial team is therefore crucial.
If they don’t effectively communicate it can impact material acquisitions and costly delays can take place.
6. Negotiate with suppliers
You most likely have suppliers that you use regularly. You may have a great working relationship, and they will pull out all the stops to assist when needed.
That aside, it is important to renegotiate prices, where necessary, to keep your costs down. Every now and again, it is also a good idea to obtain comparable quotes from alternative suppliers.
Whilst switching suppliers regularly is not ideal, you need to know that the prices you are being charged are competitive as it can and will affect your bottom line.
The same applies to sub-contractors in terms of day rates, you want to know that they are being competitive, so if necessary, invite them in for a chat.
You do, of course, need to strike a balance here if you intend switching contractors. Cheaper does not mean better in terms of the bigger picture.
Disclaimer. The views and opinions expressed here are those of the authors. They do not purport to reflect the opinions or views of IdeasPlusBusiness.com. Any content provided by our bloggers or authors is of their opinion and is not intended to malign any organization, company, individual, or anyone or anything.
For questions, inquiries and advert placements on the blog, please send an email to the Editor at ideasplusbusiness[at]gmail[dot]com. You can also follow IdeasPlusBusiness.com on Twitter here and like our page on Facebook here. This website contains affiliate links to some products and services. We may receive a commission for purchases made through these links at no extra cost to you.
The Ideas Plus Business Editorial team is responsible for this post. For collaborations and partnership requests, kindly send an email to the Editorial Team at ideasplusbusiness[at]gmail[dot]com for the terms and conditions. You can also follow IdeasPlusBusiness.com on Twitter here and like our page on Facebook here.