Major Budgeting Mistakes Construction Software Need To Avoid

Anu Singh

Anu Singh

Senior editor

Parul Saxena

Chief editor

Last updated: August 25, 2021

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Did you know, 1% reduction in construction costs could save society $100 globally?

As a construction project manager, overseeing the scope, budget and schedule is your prime responsibility. Messing up your construction budget can even lead to your project remaining incomplete.

To avoid such events, you must follow the best practices for construction budgeting. This includes thoroughly examining your project plan for risks, creating realistic project estimates, and establishing clear lines of communication.

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This blog will discuss some common budgeting mistakes construction managers are likely to make and how you can bring back your finances on track.

Inaccurate Estimation of Project Costs

Budgeting slips are common during the cost estimation phase. So, what can be done to avoid such instances? Well, you need to define the project schedule and project right from the beginning. In this way, you won’t run into trouble mid-project.

As a construction manager, you might be tempted to choose contractors who make the lowest bids. However, you must resist the urge to rush through an estimate.

While it may make your clients happy initially, but as the project progresses, your firm’s reputation will be at stake. Moreover, if your clients find out that actual costs are greater than your estimates, you might even lose the client altogether.

Here is how construction software can come to your rescue.

1. Calculate Material and Labor Costs  

Construction management software lets you standardize the process of creating project cost estimates. These tools let you calculate labor costs, create bid proposals, and integrate with cost database management to help you calculate accurate project estimates.

2. Create Construction Plans

Most of the solutions let you create construction plans electronically instead of using the conventional pencil-and-ruler method. This helps in faster calculations of the materials and the number of labor resources needed for the project.

3. Store Historical Data

Construction management solutions also let you store historical data of bids and estimates in a centralized project repository. You can analyze the data to better understand your bid win or loss ratio and other trends to improve your estimating process.

Inadequate Project Planning

If you don’t spend enough time planning your project, there are high chances you will overrun its budget. This is because you do not consider construction design flaws, task dependencies, and permit delays.

Inadequate planning can cause project portfolio delays and result in client lawsuits over disagreements about the type of work expected. Thus, planning is something you need to tick off your list before you start any work. Here is how you can sail through it.

1. Analyze Risks

Construction management solutions offer visibility into potential risks during the planning stage. Most of the solutions let you visualize the workload and ensure no one is overburdened. Thus, helping you prevent any quality issues and delays.

2. Streamlines Document Management

Another feature of a construction management software is that it lets you create a risk register where you can document potential project risks. You can share the document with your stakeholders to ensure everyone is aware of the risks. But what if you need to restrict access?

Well, you can create a centralized document library, which can be accessed only by authorized users. This will help you store all kinds of paperwork. These include building plans and cost estimates to permits and contracts.

Poor Stakeholder Communication

As a construction manager, you have to communicate with stakeholders, including your clients, staff, and subcontractors. Communication errors can also lead to delays in projects and budget overruns.

A major cause of miscommunication is having only a verbal agreement with your clients instead of signing a contract. In such cases, you might find out that the client expects you to redo the foundation and other things, which can increase your costs. Here is how a construction management software can help you.

1. Build A Digital Paper Trail

A construction management software creates a paper trail each time you communicate with your clients. For instance, if a client wants to adjust the height of a deck by a foot, you can easily record the request, explain the cost of modification, and revise budgets accordingly. You can even capture your client’s digital signature and make the change order a legal binding for both parties.

2. Improve Team Communication

Construction management software helps you streamline communication and serve customers service better. Field workers can access the app on their mobile devices to view their daily schedule, upload site photos, get alerts of upcoming due dates and deadlines, and share documents.

Tips to Control Your Construction Budget

Now that you are clear on all aspects of construction budgeting, here are some simple yet effective tips to control your construction budget.

  • Increase your project planning time by 50%.
  • Have your project team analyze your project plan to ensure there are no oversights.
  • If you have the budget, take consultation from a legal expert and draft your construction contract, and become confident in your budgeting decisions.

Wrapping Up

These were some of the tried and tested techniques for making the best construction budgets and following them.

Still dependent on old methods of calculating construction budgets? Invest in the best construction management software to solve all your concerns!

Anu Singh
Anu Singh has worked for known SaaS firms and holds extensive expertise in breaking down technical topics into digestible copies. Her content speaks volume about her creativity and knack for exploring new avenues. When not writing she likes to read novels, hone her editing skills and stay abreast with the latest industry trends.

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