Managing Your Construction Budget – How to Stick to Your Estimate and Control Cost

No construction project ever goes exactly as planned — there’s always the possibility of last-minute change orders, supply chain issues, dangerous weather conditions and more. Despite these variables, a construction firm’s success depends on its ability to produce accurate estimates and stay on budget.

Today, that means finding the strongest software for managing construction financial processes. The days of relying on pen and paper and spreadsheets for construction budget management are long gone – or at least they should be. When it comes to staying on budget, construction software has become indispensable. Any firm still shackled to past strategies simply can’t compete.

Staying on a budget requires two things: making an accurate estimate and sticking to it. Granted, there will always be variables that are beyond the scope and control of any firm, but the right construction software can help firms anticipate challenges and limit cost overruns.

Using Construction Budget Management to Help Control Costs

Managing a construction budget is made easier with an integrated, birds-eye-view of financials — and unified construction software is a huge help in this area. Because ERP systems are connected to a single database, team members both in the field and in the office see the same financial information. Project managers can manage costs and accountants can capture those costs all on the same platform.

Increased communication between project managers and accounting is one of the best strategies for managing project budgets. With unified software, all areas of operations have access to the same data. Project managers can see how their costs compare to the overall budget, and they can forecast on individual line items. For example, if laying concrete is delayed by bad weather, a PM can see how this delay will affect cost. This information is crucial for finding ways to compensate for any extra expenditure and communicating financial changes to accounting and other project leads.

And when it comes to invoicing and pay requests, accounting can easily get invoices approved all within the ERP system. If companies have separate software for project management and financials, accounting must get project managers to manually approve invoices, either by emailing or printing them out. Not only is this inefficient and time consuming, but it also increases the likelihood of human error. Unified software improves data accuracy and helps project managers and accountants avoid costly errors.

Avoiding Delays

Projects that go past schedule increase costs and cut into a construction firm’s profit margin. So naturally, keeping projects on-time is another key component of managing a construction budget. There are a number of ways that out-dated technology can lead to delays. When invoice approval is done manually, for example, it can take longer for vendors to get paid. If payment is late, there could be delays in services, pushing back the dates of completion on certain jobs. There’s also the issue of change orders. If change orders aren’t communicated to the different areas of operations, there will be delays in arranging for the added work and unnecessary work may be completed in the meantime. Finally, out-dated technology increases the number of steps it takes to complete certain tasks. While inefficient procedures may seem insignificant, they can accumulate and stretch out the timeline of a project.

Unified construction software solves these problems by improving communication and eliminating resource-intensive processes. Making the most of employee time and energy is essential in keeping a project on-time. Using unified construction software will increase efficiency and productivity by removing unnecessary tasks and operational headaches. Cutting back on the time it takes to complete even the smallest job can lead to exponential benefits when it comes to your bottom line.

Keeping Everyone in the Field in the Loop

One of the most common reasons for broken budgets and cost overruns is lack of communication. When construction teams can’t collaborate easily, errors happen. Mistakes caused by miscommunication can waste time and resources, as it often means backtracking. The good news is that these types of mistakes are 100% avoidable.

With advanced collaboration software, team members can access project data, schedules, and lists on mobile devices. With a platform like CMiC Field, everyone stays in the loop with project alerts for actionable items or change orders. Put simply, every member of the team has the information they need to do the work right, the first time.

The Construction Project Post-Mortem

Budget considerations don’t end after a project is over. Reviewing the costs of past projects is a great way of improving budget management on future projects. Construction software helps you capture all the data from a given project, and over time this historical data becomes a wealth of insight that can improve planning and execution.

With CMiC’s unified platform, for example, you can import all the different versions of a project estimate. By gathering this information, you can see where your estimate began, what the final estimate looked like and how the estimate compared to the actual project cost. Instead of relying on estimating books that don’t account for regional differences, you’ll have a real account of the projected, actual and unexpected costs associated with past projects. Knowing this will improve the accuracy of future estimates, which in turn, will help you stay within budget.

Managing complex budgets requires powerful and reliable construction software. And in this fast-paced, competitive marketplace, clients’ expectations keep on rising. To keep up and set your firm apart, check out Doomed to Fail: Why Project Controls Are Vital to Project Success.