No matter what line of business you operate in, budget overruns on projects occur all the time. With the COVID-19 pandemic, staying within budget in 2020 was even more challenging than in past years. No company has unlimited resources to throw at projects, therefore creating a budget is essential. However, it’s not always easy to assess the costs of a project. If you underestimate your requirements you may end up short-staffed or unable to complete a project in time. Therefore it’s imperative to establish expectations and create a set budget for every aspect of the project. The following are 5 steps to help keep your project on budget.
Avoiding Budget Overruns
Step 1: Establish A Realistic Budget
One of the most effective ways to create a realistic budget is by looking at expenses from previous projects. If this is the first project with a new client, review the budgets from similar-sized projects. Remember to always prepare for potential obstacles along the way as unexpected setbacks may occur. This will help you stay within budget regardless of any complications that may appear throughout the project.
Step 2: Define Your Resources
After getting an understanding of the project details, you can begin to assemble the pieces of the budget. This means determining what resources will be necessary for the project. The two most important resources to define are the staff and the equipment. As staffing is usually the most expensive cost, determining how many people you need and for how long is very important. Next, decide what equipment you will need to complete the project. Whether it’s an excavator for a construction project or a lift for a lighting project, you must determine what equipment is needed and how it fits into the budget.
Step 3: Avoid Scope Creep
Scope creep refers to the uncontrolled change or growth in the grand scope of a project. Although some changes are unpredictable and inevitable, creating a process to communicate changes will help you stay within the budget. Create a framework for communication between you, the client, and your staff. This will help properly budget your team’s time and keep the project on track.
Step 4: Assign And Track Work/Time
This is where budgeting for a project can get a little hectic. You have to determine dollar amounts for all resources and staff as well. Researching online and talking to team members with past experience can help you get a better understanding of your expenses. For some resources such as staffing, it will be necessary to model out all the costs. This is due to the fact that salaries vary from person to person and time is a factor. Additionally, it’s essential to closely track staff time. This is where project management software comes in handy. Without a central spreadsheet for all resources, costs, and staff time, budgeting can become a nightmare.
Step 5: Obtain Approvals
When presenting your project budget to stakeholders or other individuals who must approve it, be properly prepared to justify the items and expenses. This is when you want to highlight key costs and other rationales, such as staffing. Once the budget has been approved, it will be the project manager’s responsibility to oversee everything. As stated earlier, it’s recommended that you utilize project management software to track costs. If teammates fall behind on deliverables or unexpected setbacks arise, costs will be affected. Therefore, you must stay on top of your staff and ensure the project runs smoothly.
The Perfect Team For An On-Budget Construction Project
Building a project budget is essential to the success of a business. Yet, budget overruns are still common and can be detrimental to your company. For those seeking a trusted construction team in the Central Florida area, look no further than Poli Construction. At Poli Construction, we believe in being honest and open about communication, being upfront about costs, and delivering quality work on schedule and within your budget. No matter the size of the project, we will make you our top priority. For more information on our services, please visit our website and contact us today.