How to Complete a Construction Project Under Budget
Summit Design + Build’s Senior Project Manager, Kevin Criner, shares his insights on how to complete a construction project under budget without sacrificing quality and project schedule.
There are three aspects that are commonly thrown around while determining the success of a construction project: quality, timeliness and within budget. Often one is sacrificed to achieve the other but, in my eyes, (and most clients’ eyes) all three are essential. With numerous years of construction project management experience under my belt, I want to share my take on how to successfully complete a project within or under budget, while keeping quality and schedule in mind. Be aware that a project within budget is the project itself and not the bottom line profit you turn into your boss at the end of the job. An owner with a blown budget can be just as detrimental.
The “Not Included” Winter Conditions
Start with a Good Number
Obtain proper subcontractor coverage and understand scope– You should always be mindful of what you are plugging into a bid estimate. During the hustle and bustle of putting a bid together this might be tough, but if you have three prices for a particular trade you should ultimately be able to understand what they have or what they may have missed. Remember, you must buy the scope from each subcontractor. Don’t plug in low numbers just to drive the number down on a piece of paper, that number isn’t real.
Confirm the client understands what you have– It is very common when getting scoped for a job to become a “yes man/women.” After all, you want the project and you’ve put in a lot of work to get to the table. It is important to remember that because you are at the table to begin with, your number is something they can live with. If it is substantial and you do not have it, let it be known. The cost of it will not go away. The same concept applies when negotiating a contract. Multiple meetings will be held over weeks/months/years in which many subjects are covered. If the owner insists on leaving something out of the budget, make sure you are very clear that it is being left out each step of the way. In some cases, if you know it is going to be a cost, fight to have it included. The project will run smoother should you not have to get a change order for it later.
Negotiate Wisely– If you must skim a little to win the job or to make the job happen, you should always know where that money is coming from. Lower your budget in areas where you can make the numbers work.
Limit Change Orders
Avoid the Big One– “The Big One” (a large change order) will more than likely come from a failure to achieve one of the items above. Sometimes a client voluntarily makes a big add to the scope of the job or a change derives from a source you have no control over (i.e., municipality, utility company). It is extremely important to go over these things during preconstruction and try to get them in the budget. You know it’s a possibility, so why not discuss it?
Buy out the details– It is your job to buy the plans from the subcontractor. Make sure every item in each plan detail has a subcontractor attached to it. Run through the schedule and make sure each sequence makes sense. Make sure you aren’t buying an ideal schedule from one subcontractor that cannot work. This results in changes and/or delays to the schedule.
Challenge each change order– When there is inevitably going to be a change in something understand the work involved. Do not be the pass-through between the subcontractor and the client. Agree with what you are presenting and have multiple solutions to present. Very commonly there is an easier way to achieve the same thing. Get creative and come up with solutions that are least detrimental to the budget, schedule and quality of construction.
Preserve the schedule (time is money)– Subcontractor schedule input should be provided as early on as possible. Your perfect schedule usually has some duration or sequence errors and the subcontractors can help you fix it. Also, in some instances, they can help you pick up time. Sub durations should also be constantly monitored. Just because it doesn’t seem like a delay at the time, it could be in the very near future. If the schedule is not maintained, it will result in an accelerated/overtime schedule that ultimately costs the project money.
The Utility Company Add
Define and Know Your Budget
Timely Buy-Out– Knowing what savings you do or do not have determines your strategy throughout the project. If you have un-bought scope then you are at risk of additional overages you are not projecting for. In budget management this can be detrimental to the bottom line.
Monitor the budget– If you know where your numbers are then you know when you do or do not have money to spend to handle an issue and push the project through. If you wait for monthly (or worse) reconciliations then you may be approving too much or spending time fighting something you could have handled prior.
The Missed Blocking Scope
It is also important to remember that the budget should be properly developed, maintained, and protected throughout the duration of a project. There should be no surprise come the end of the job. Keeping all the above points in mind, an under budget, on-time, quality construction project should be well within reach. Do you have an upcoming construction project? Reach out to our team of construction experts to get started!