Financial matters are stressful. Building or renovating a building is stressful. In the field of homeowners, GJ Gardner Homes estimates that around two-thirds go over budget. That’s stressful. You won’t want that to happen to you, especially for much bigger projects.
In this article we’ll discuss some common points which cause construction projects to go over budget. Then we’ll give you some suggestions on how you can prevent these, so that your building project stays in budget.
The overruns in cost come from a lot of factors. However, most of them are grounded on mistakes in estimation. While this can happen due to multiple external factors, much of it can come from unrestricted budget plans. It can also be because of the builder’s inexperience in the field.
Before you go asking where all the extra money went, check out the following list of errors you or your builder might have come across.
Uncovered/Left Out Items
Sometimes, there are items that you thought were covered by a bid from the contractor or sub-contractor. It turned out they weren’t.
During the estimates, some costs might have been forgotten. This includes permits and
fees (soft costs) as well as construction costs. There may be items not included on the specs and plans.
Large-scale projects are long-term endeavors. Prices pegged at the planning stage may be outdated once the construction takes place.
New Techniques and Materials
If the builder is not adept at handling a new material, there would be a learning curve. Same goes for a new technique. The longer it takes before they can work with it, the longer you have to pay them for the labor. Having a builder whose employees have been with them for a time and is already adjusted to the system answers this dilemma.
While you won’t be needing full-on detailed breakdowns, a low-quality documentation from your builder leads to too much guessing and assumption. This significantly increases room for error, as well as the chances that you will go over budget.
Delaying the build
It’s not just more labor you are paying for during delays. There’s additional payment for storage, additional interest, upkeep fees for materials and approval extensions. More than a quarter of homeowners have this issue, and the chance increases for bigger projects.
So how can you be safe from these pitfalls? It’s not as hard as you think. In fact, there’s only one answer: get an expert. You need a builder not only with the experience in the type of construction you are planning, but also someone that has a proven track record in the matter. They have enough know-how to tell you where your budget might fall short, and what can be done about it.
Using a local construction company will mean it is easier for them to go to site and get the project finished on time. Furthermore, if there are any issues, they have a local reputation at stake so will want to make sure they do not ruin it.
But how can you tell if they are up to the job? Well, there are certain tell tale signs you can look for when choosing the best construction company for your project.
A construction company is not a one man band but a carefully controlled and managed team effort. So ask what the construction company’s management structure is, both on site and within their organisation. Any organised business is only as good as it’s management team. Having a clearly defined organisation structure per project is the first step to tell if a construction company is up to the job to managing your project.
Whilst management structure is the first thing to look at, just be careful the structure is not too big. The larger a company, the more mouths they have to feed and the more profit they need to make to stay alive. Therefore look for a lean structure. Ask exactly who will be working on your project and for how many days. Any good construction company will know this information in order to be able to quote a job.
Accessible and Accountability
Another thing with an “expert” is the willingness to discuss matters with you. Make sure you can reach them for inquiries. Also, make sure that they explain every bit of the project to you so you are not left in the dark. It is your project, after all. Ask about their documentation processes to make sure everything is transparent. Credentials from reputable authorities like ConstructionLine, Federation of Master Builders are a big plus and show experience as well as accountability.
So there you have it, getting an expert ensures that you get peace of mind as your project rolls. It is the single best decision you could make from the conception to the inauguration.