It’s no surprise that construction projects often go over budget and off schedule. In fact, in 2015 McKinsey & Company published a report stating that 98% of megaprojects face cost overruns or delays with an average cost increase of 80% of the original value. In today’s world, coming out of a global pandemic, what does that really mean for your budget? And is it even possible to stay within budget for your construction project? Having been in the construction industry for 12 years, at Caliber Solutions, we know it is possible.
We’ve outlined steps project owners can take to stay within the confines of a construction management job. Taking an honest review of the ways to finish your construction project on time and within budget, here are some of our tips:
- Set reasonable expectations.
Some prices ‘are what they are’. For example, the cost of materials: a pipe costs what pipe costs, whether we are talking pre-Covid or post-Covid. There’s no magic formula here. But if you set a budget that is well below the basic costs, that means you are either guaranteed to exceed your budget or you are going to be cutting the wrong corners, usually in quality and safety. It is critical that you hire a reputable company with a strong safety record and quality of work. You don’t want to end up with a bigger problem that is more expensive than the original job because you didn’t do it right the first time.
- Don’t always pick the lowest bid.
This is the biggest problem we see today, especially now that budgets are even tighter after a pandemic. If you get multiple bids for the same job and one comes out significantly lower, don’t rush to sign the dotted line. From our experience, 9 times out of 10, an outlier low bid often means the contractor didn’t understand the full scope of the project. If you move forward with that contractor, as the job progresses, you will likely get add services and change order after change order and end up over budget to do the same job.
Sure, it may seem tempting now to jump on that ‘deal’ of a bid, but you can’t afford to have an open checkbook later to simply finish what you started.
- We always say, ‘Plan your work, work your plan’.
Now that you’ve selected the right contractor for the job, transparency is key. Regular communication with your contractor through direct contact or ensuring you are getting regular and accurate reporting is invaluable. Luckily, today owners can utilize the latest technology with project management systems like Primavera or P6, to ‘work your plan’ and maintain control over hitting milestones and productivity. Additionally, ensuring integration between all aspects of the project from civil, mechanical, electrical and everywhere in between makes a project run smoother.
But, if you’re finding things aren’t on track, ask questions. This open communication keeps the project progressing to avoid unnecessary delays and expenses.
- Expect the unexpected expenses.
Even in the best situation, unexpected issues can be uncovered once the job starts. Staying on top of key performance indicators and continuous forecasting allows you to track, assess and fix issues quicker, in turn, saving you time and money.
Going back to points one through three, the right contractor with good communication and reporting will ensure you are seeing real-time, accurate data across the project to find issues and quickly fix them. This way you are minimizing downtime and unexpected expenses.
Today more than ever, finding the right company for the job isn’t easy. But when you partner with an honest and reputable construction contractor, with the best people, the rest of the project goes a lot smoother.
Caliber Solutions is your premier turnkey construction contractor focusing on integrated services in professional services, civil/structural, mechanical and I&E for upstream, midstream, downstream, refining, chemicals and renewables.
Get in touch with us today to see how we can help you stay within budget and on schedule for your construction project.
