Managing construction project costs is critical to ensuring that the project is completed on time, to the client’s satisfaction, and within budget. Cost overruns and other financial errors can lead to unhappy clients and a job that produces no profit or, worse, results in a loss. A cost management plan for construction projects should be developed early and followed closely throughout the lifespan of the project. As you develop your plan, keep the following in mind.
- Plan for the unexpected: It would be impossible, of course, to plan for every contingency and head off each possible error. As you develop your cost management plan, however, recognize that there may be some surprises along the way. Do everything you can to allow some room in your plan for unexpected developments that could affect costs.
- Strive to avoid omissions: Anything left out of a bid or contract could be a significant problem later. Make sure you understand the scope of work thoroughly and that you check your bids repeatedly to make sure all important points have been covered. Work in provisions that protect you in case the client leaves any elements out of the specifications, plans, or requests for proposals.
- Do not make assumptions: Incorrect assumptions could be the source of lost profits on a job. For example, don’t assume that a certain procedure or type of equipment is allowed on a job just because it was allowed on another job. Incorrect assumptions can be particularly damaging when working in different geographic areas where rules, standards, and regulations could be different. Always check and recheck the details of a job before committing to a contract.
- Inspect and prepare carefully: Inspect job sites, raw materials, supplies, equipment, and other elements carefully and thoroughly as you prepare to undertake a job. Surprises or missed problems at this point could delay the start or lead to unexpected costs.
Construction Monitor is the industry’s trusted source for news on trends, statistics, and housing starts in communities around the country. Contact us today for more information on developing and implementing a cost management plan for construction projects.