As the construction project manager, one of your primary responsibilities is to oversee the projects’ scope, schedule, and budget. Among the three, the budget requires your most attention for so many reasons. Once fumbling with the budget, your construction project may overshoot its schedule and remain incomplete. And no project manager ever wants that to happen, right?
So, to avoid such events from happening, you should follow the best practices for the construction budget. Apart from implementing these best practices, it would help if you also considered different types of construction software solutions, especially subcontractor scheduling software and construction estimating software. A combination of best practices and software tools will offer you significant savings throughout the project and help you avoid budgeting mistakes.
This article will cover some common budgeting mistakes every project manager is likely to make. We will also explain the best practices for every mistake and highlight how construction software solutions can bring your finances back on track.
1. Inaccurate Estimation of Project Costs
During the cost estimation phase, plenty of budgeting slips used to happen. Hence, always define the project budget and schedule right there and then so that you do not run into trouble mid-project. You’ll face trouble if you discover that your construction project will not meet its estimated costs.
Clients often choose contractors who make the lower bids. If that is the case, strongly resist the urge to lower your bids or rush on a quick estimate. Initially, low costs may make any client happy, but as time progresses, your construction company’s reputation will be at stake when your clients find out that the actual project costs are far greater than your estimates.
How Construction Software Assists with Budgeting?
A construction software like a construction estimating tool is beneficial in standardizing the process of cost estimates. This tool offers features like the following:
- Automatic calculation of labor and material costs
- Integration with costs databases
- Creation of bid proposals, etc.
Moreover, this construction estimating software allows you to store historical data of your estimates and buds in a centralized project repository. It will be easier for you to deeply analyze the historical data to fully understand your bid’s win or loss ratio and other trends to improve your estimating processes further.
2. Insufficient project planning
If you do not spend enough time planning your construction projects, there is a better chance it will overrun the project budget, even if you have an accurate construction estimate. That is because you do not know if there are rising issues like design flaws, unidentified task interdependencies, inaccurate capacity planning, scope creep, etc.
Inadequate planning cannot only cause delays in your project or blow your construction budget, but it can also result in client lawsuits over disagreements about the type of work expected. Thus, planning is a task you always need to tick off your list even before starting any project work.
How Construction Software Tool Assists with Project Planning
Cloud-based project management software like Pro Crew Schedule, offers full transparency into your project, particularly on project risks in the midst of the planning stage. Its scheduling feature allows you to visualize the workload of project members to make sure nobody is overburdened, therefore preventing quality issues and delays.
Document management and file sharing, another critical feature of construction project management software, allows you to track potential project risks. You can also easily share these files and documents with any stakeholders to make sure everyone knows the risks.
3. Poor Stakeholder Communication
As the project manager, you need to communicate with a lot of stakeholders, including your crew members, clients, and subs. It is crucial for you to understand that common errors lead to budget overruns and project delays. As a matter of fact, miscommunication with your clients is the core reason why there are unexpected cost increases.
A typical cause for miscommunication is having only a verbal agreement with your customers instead of signing a legally binding contract. For that instance, you might find out that the client expects you to redo or rework the foundation as part of the construction job. As a result, costs will get higher, unfortunately.
If you find yourself in that situation, you should share a comprehensive statement of the working document with your clients to avoid any form of miscommunication. Define the project’s goals, deliverables, guidelines, costs, timelines, etc., so that you, your team, and your client are on the same page regarding expectations.
How Construction Software Tools Assist with Stakeholders’ Communication
A construction software designed for project management for construction creates a digital paper trail every single time you communicate with your clients. For instance, if the clients want to change something, you can record these requests as a change order, showing the cost details of the modifications and has to be agreed upon by the clients.
Team communication and collaboration are areas where construction scheduling software can help drive efficiency. This fantastic software tool fosters construction crew management, allowing a project manager like you to achieve strong collaboration and consistent communication with your team.
Additional Tips to Control Your Construction Project Budget
We already previously stated how construction software these days is helpful in preventing any budgeting mistakes you will most likely commit. Below, we share additional tips to control your project budget, helping you avoid more budgeting mistakes.
1. Control project budget in real-time (Track Planned Budget vs. Actuals)
It is painful that your company is suffering from over-budget projects. It’s even worst that sometimes it may cause a fatal outcome. So how can you best avoid it? There are a lot of components, but one major is to control your planned project budget vs. actuals in real-time every day.
Keeping your hand on the project pulse helps avoid any significant deviation and allows you to make the right decision on time.
2. Forecast your additional expenses
If you want the health of your project to be good, it is crucial to track or monitor it daily. But if you want to anticipate any issues in the future, it is crucial to catch “bad symptoms and signs” in the earliest stage and take timely actions immediately. You must be able to forecast budget deviations and additional expenses, like reworks, rising costs of raw materials, and overspending on scope changes.
3. Control and manage your subcontractors
The industry you belong to is extremely dynamic. It is pretty challenging to fill in all the project capacity with your resources or supply unlimited employment for your people. Subcontracting is growing. Therefore, the more subs you have, the more contracts you need to control and manage, and the more invoices you get and track.
You and your team should always be aware of the agreed contract price, sub invoices, remaining amounts to pay, and so on.
4. Plan your money with confidence
Do you know how much money you will have to spend next month? How much income will you get? Perhaps, you already know because this is somewhat like an “air” on your company and the projects you run. But how much time can your team generate a cash flow report? How accurate is it? Will you be more confident if you know your cash flow far in advance?
Tracking data from project costs must become your priority. You should also prioritize crafting a more precise cash flow planning. Doing so helps you and your team trust numbers and plan your money more confidently.
5. Monitor the health of your projects
The ability to monitor the health of your construction projects daily and in real-time is crucial for your construction business. Always know that outdated data does not give you any value. Worst, you can even miss valuable time to make the right and best decisions.
Real control comes from accurate up-to-date and the capacity to see the bigger picture.
Pro Crew Schedule Is All That You Ever Need
Pro Crew Schedule is a proven software solution and “cure” for the pains of your construction company. We are glad that you read this blog since our goal is to share our industry know-how and discuss how project management tools can help you better control your budget and project financials while keeping your construction projects healthy.
Pro Crew Schedule is a cloud-based scheduling tool designed for construction professionals managing construction projects, their people, and almost all aspects of the business. This cutting edge software solution does not only focus on project budgeting, but it also caters to every part of your operations:
Deploying Pro Crew Schedule gives you the following benefits:
- Data-driven decision making
- A central hub
- Real-time Updates
- Easy Integrations
- Resource Management
- Transparency and Accountability
- Easy to use
- Time management
- Cloud storage
If you like to try Pro Crew Schedule firsthand, get started with a 30-day trial. We offer it for FREE!