The construction industry is well known for tight margins meaning that businesses within this sector must work extra hard at monitoring spend to ensure they make a profit. In fact, research has revealed that 69% of projects go over budget by at least 10% and only 31% come within 10% of their original plan. 

Why do construction projects go over budget?
The construction industry is notorious for overspending, and typically, the main reasons a construction project goes over budget is lack of planning and budget control, but communication breakdowns and unforeseen circumstances, such as weather, can also play a part.

7 tips for keeping your construction projects on budget
It can be challenging to keep your construction projects running on budget, but not impossible. With good cost control measures in place, you can ensure your projects are more profitable and efficient. Let’s look at our 7 tips for managing your construction costs:

Thorough estimates
You can have all the best cost control techniques in place, but if you don’t take your time to produce thorough estimates then it’s likely they will fail. Putting together thorough estimates is something that cannot be rushed and it’s important you examine all areas of the project such as overheads, permits, labour, equipment, and materials, and draw up a list of miscellaneous costs you may potentially encounter. Don’t forget to use experience from similar jobs and compare their costs to make your estimates more accurate and get inputs from various job functions to support the process.

Daily reports
Conducting reports daily will highlight any areas that may be going array and will help you identify if costs begin to creep up, so you can put measures in place sooner rather than later, before you run into disruptions.

Communication
In much the same way as regular reporting is beneficial, so is strong communication, as you are more likely to stay on budget if your team understands what they need to do, and when. Open lines of communication can also help you deal with costly issues as soon as they arise, rather than risk going over budget while it takes time to resolve them.

Limited change orders
Changes mid-project are one of the highest areas of expenditure, as contracts managers make changes requested by the customer. By changing your agreement to making changes only in emergencies or rectifying your own errors, you will limit the damage to your bottom line.

Back-up
You should have back-up plans in place in case something happens which threatens your budget like the breakdown of machinery or loss of a crucial contractor. Consider all potential risks, like the ones mentioned, and consider a back-up plan which could help mitigate unexpected additional costs.

Trusted subcontractors
Subcontractors are not employees and therefore they can become an unpredictable source of extra income and delays, and you could experience quality control issues too. It pays to put together a list of trusted subcontractors you have previously had a good experience with, so you don’t need to take the risk in finding new ones, or encounter costs mid-job while you source additional contractors.

Construction Management Software
Ultimately the most efficient way of keeping your costs under control is with robust construction management software to give you complete visibility, reporting and clear lines of communication. A good construction solution will give you control over all aspects of your construction projects so you can reduce costs, stay within your timeframes, and maximise profitability.

Final thoughts…The construction industry is a fast-paced environment, and it can be particularly challenging to stay on budget and within your set timeframe as the industry is well known for overspending and over-running due to the unpredictability of the environment. However, by implementing some clear cost control methods such as regular reporting, clear lines of communication, only employing trusted subcontractors and providing thorough estimates you can begin to regain control of your costs and protect your bottom line. Investing in a robust construction management solution is one sure fire way to help you manage all areas of your construction projects and stay on time and budget more efficiently.

To learn more about our construction solution Pegasus CIS 5, please contact us today, and arrange a free demo to see it in action.