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by Peter Landau | Aug 26, 2021Construction projects will never get off the ground without financing. Money sets the gears of construction management in motion. Creating a construction budget, therefore, is one of the most important pieces when developing a construction plan.
How do you create a construction budget, anticipate the costs for a project and track them to make sure you’re not overspending? Let’s take a look at what goes into making a construction budget.
A construction budget is an estimate of the money required to take a construction project from initiation to closure, including all associated costs and expenses that are accrued during the building process. While the budget is an attempt to forecast all costs in a construction project, you should leave some wiggle room to account for any emergencies or unexpected building costs.
Construction project managers start with the project plan, most likely a blueprint, in order to assess what materials will be required. Factors like job site preparation must be considered, which can include demolition costs, equipment rentals, permitting and inspection costs.
As the project execution begins, other costs begin to appear. There are labor costs and safety requirements for all on-site workers. Transportation can be another cost. Residential and commercial construction projects will also have unique costs. All these variables must be considered and calculated.
Tracking those costs is a way project management software can help. ProjectManager is construction management software that plans, monitors and reports on your construction budget in real time. We have live dashboards, one-click reports and a robust online Gantt chart that can document your work breakdown structure, filter for the critical path and set baselines to compare planned costs against actual costs. Try ProjectManager free today!
Chances are, you don’t have an unlimited fountain of money to work with. Instead, you have stakeholders that have invested in the construction project and want to get a profit—and going into any project without a budget is a sure way to spend too much money. That’s why you need a budget baseline that defines how much you can spend. Having a budget and construction project plan go hand-in-hand with any successful project.
A construction budget is also a great way to keep your project on track during execution. The more unaccounted expenses in a project, the longer it’s going to take to finish. Making a budget lets you take account of as many construction costs as possible and helps you stay on schedule.
Use this free Construction Budget Template for Excel to manage your projects better.
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In simple terms, a construction budget is just like any other project budget, it adds up all the costs so that the project can be executed. Construction projects, however, have unique costs. So before creating a construction budget, it’s important to understand construction project costs, which fall into three basic categories:
In terms of what to include in your construction project budget, that depends on the project you’re working on. But in general, a construction budget should include the following:
This free construction budget template allows you to keep track of all your construction costs, including labor, material, equipment and other types of costs. This template also allows you to compare estimated vs. actual costs so you can determine whether your budget is over or under budget at any time during the execution of your project.
We offer a variety of free construction project management templates for Excel you can use to manage all aspects of your project.
To create a construction budget that’s an accurate forecast of how much the work ahead will cost, construction project managers follow these three steps:
To accurately forecast how much a construction project will cost, you must review historical data for similar construction projects, speak to suppliers and understand the project you’re about to start. Set realistic expectations by looking at resources, design options, etc.
Research leads to the project owner or architect choosing a final design. The project manager uses this information to create a requirements list, including materials and cost estimations. This informs the project bidding process, which is when the project owner chooses a general contractor and sets the framework for building the actual construction project budget.
Now the project manager should speak to the stakeholders. This highlights potential issues that can be resolved before executing the project. By documenting the pre-construction phase, the project manager has a paper trail to show where unexpected costs can come up. These potential costs can inform the construction budget.
One of the biggest mistakes a project manager can make when creating a construction budget is inaccurate estimates. This can be made more problematic by not having a definitive project schedule in place before doing a budgeting forecast.
Also, when estimating, there’s a habit of only looking at the bottom line, which can lead to accepting the lowest bids from general contractors. The low cost might please your stakeholders at first, but if the quality of the work is poor, that pleasure will be short-lived. It can erode your reputation and end up costing more in the long run.
Just as important as the construction schedule is your plan. Not taking the time to make a thorough plan for your construction project will slow you down in the long run. You might miss dependencies, design flaws and more. This will delay the project and potentially bust your budget.
To avoid this, you can use construction scheduling software that’s equipped with robust project planning tools such as ProjectManager so there are no discrepancies between your construction plan, schedule and budget.
As good as our free construction budget template is, you’re not going to make it too far on an Excel spreadsheet. ProjectManager is online construction management software that organizes tasks, teams and projects to keep you on track and within budget.
The project plan is the blueprint for your budget. On it, you collect the tasks you need to accomplish, and the resources needed to complete them. ProjectManager’s interactive Gantt chart has all the basics, such as linking dependencies and setting milestones. But unlike competitors, you can set a baseline, which lets you compare actual expenditure against the plan.
Not only do you have real-time data to show progress and performance as it happens, but everyone can comment at the task level. Email alerts and in-app notifications keep everyone updated on changes to task status. That means your on-site crew can communicate seamlessly with your team at HQ.
For more detail, use ProjectManager’s live dashboard. Data is automatically collected and calculated, then displayed in graphs that show metrics such as time and. One-click reports go deeper, with filterable data to show just what you want. They’re also simple to share with stakeholders and manage their expectations.
ProjectManager is award-winning software that helps you manage construction budgets with real-time expense reports. Our features let you plan, schedule and monitor your project with live data. See how ProjectManager can help your next construction project budget by trying it free today.
