If you’re planning on building a project, it’s essential to define your construction budget to ensure it does not exceed the 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 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 most significant expenses. 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.
Some needs exceed expectations if you end up needing workers with special training. Recruiting, hiring, and training costs also add up and take from your budget. You could end up overpaying if you don’t know the fair costs of hiring workers.
Before creating a direct labor cost, you must 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 much 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. This might seem complicated, but figuring out your costs as accurately as possible will offset your labor costs.
You can sell your project for more when you spend more on materials. Keeping your material costs minimal might lead to buying cheap or low-quality materials that don’t last as long as they should. It would be best if you bought the proper grade of materials based on your project needs.
With many 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 usually leads to overspending and budget problems. One of the costs people fail to plan for is the travel costs associated with a large construction project.
You’ll need to make frequent trips if you have a project far from your office. If you need to take flights or send your staff 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 traveling to meet with upper management, see if you can substitute some in-person meetings for teleconferencing. Video conferencing could save a lot of the money you’d spend on traveling.
4. Think About Equipment and Real Estate
You’ll probably need one near the construction site if you haven’t set up a local office. Having a project office for every major work site would be best. Consider that you must also fill that office with staff and equipment.
You’ll need someone knowledgeable to field phone calls with questions about your project and jobs on site. There is also the need for insurance when paying for any office where your staff works. You’ll need your employees covered and the building itself in case you’re liable for any issues.
You’ll also need to have insurance for the site itself. These costs will 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 project elements. Whether you buy or rent that equipment makes a difference in your budget.
If you think you need equipment, that must be part of your budget. Large projects incur costs within it comes to equipment, fuel, and maintenance. Define those elements in your budget 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 high-tech, check out our guide to the ways technology is changing construction.