There are a wide variety of factors that play into the making of a budget for any construction project. Each factor influences the budget in a different way, making it difficult to gauge the overall budget.
In some instances, the factors are quite obvious, which can make it easier to see how they will financially influence the project. Logistics that include land acquisition, permits, and construction hard costs all have a clear effect on what construction companies invest their money in.
Other factors like materials, labor, and equipment are also an obvious aspect of construction, but unfortunately, are not as easily measured.
The Pieces of the Budget Puzzle
The cost of materials can vary greatly due to deviations in shipping and taxes. For example, purchasing materials in a high volume may reduce costs, but buying more materials may also end up increasing transportation rates.Labor fluctuates frequently as well due to changes in the municipality as well as overhead from secondary benefits like employer tax contributions. In order to report the cost of labor, the wages are calculated and then represented by a percentage of total expenses. Because obtaining satisfactory labor is such a vital aspect of the success rate of the project, it is critical that the estimator frequently refers to local rates to update wages.
The cost of equipment is generally expected to be a set price, but there are many other aspects that can play into the cost. It is greatly impacted by the investor’s decision to buy or rent, how the equipment works together, and unanticipated closing expenses such as equipment insurance or licensing. At Branco, our investment in our fleet of equipment and vehicles helps us control costs and cost projections on all of our projects.
Beyond the more obvious factors, there are also many unforeseen logistics from future and life-cycle costs. Maintaining, repairing and replacing all play into the unexpected finances needed to keep a facility or job site and its systems running.
Overall, the budget is an important aspect of any project from commission to completion and it’s incredibly important to ensure that project bids and estimates are as accurate as possible. This is something we pride ourselves on doing here at Branco—we have an incredible track record of bringing projects to completion on time and on budget and these are just some of the factors that we are careful to factor into each bid.
What are some of your best tips or proven tactics when it comes to creating project budgets and sticking to them?