How to Budget Properly for a Construction Project

Engineer man working in the office, Drawing the construction project.

Construction projects cost huge sums of money. Without proper budgeting, it is quite possible to go overboard as far as spending is concerned. To keep such expenditures in check, it is important to develop and adhere to a strict budget that defines every possible avenue of expenditure. The process of creating a construction project budget is quite involving and should be meticulously done to capture every detail. Here are some of the important entities that should be captured within a comprehensive construction project budget.

 

Research and analysis

 

The research and analysis stage of the construction project outlines activities that relate to conducting pre-construction tests of models as relates to the construction project. Funds should be allocated to testing the ground, soil sample analysis, and feasibility studies. Various designs should be appropriately tested on how much each would cost. Other tests that should be conducted in the research and analysis stage include wind and earthquake testing that seeks to ensure that the construction will be strong enough to withstand such elements.

 

Documentation and permits

 

The budget should also capture expenditures that relate to obtaining of the necessary construction documentation and permits as required by the law and other relevant government agencies. Documentations such as engineering drawings that show the structural schematics of the construction should be appropriately budgeted for and printed.

 

Project development

 

The project development stage is the most consuming as far as budgetary allocation is concerned. The project development expenditure covers areas such as purchasing of construction material, hiring of construction equipment, hiring of the necessary workforce required to undertake the construction, and securing other construction implements required to make the construction project a success. Utilities such as water and electricity should also be budgeted for. Other avenues of expenditure commonly associated with the actual project development stage include testing and evaluation of the construction site from time to time by external bodies to ensure the project’s integrity.

 

Contingency budgeting

 

Contingency budgeting should be included as a percentage of the overall project costs. Depending on the scale of the construction project, the contingency allocation should be between 5% and 15% of the total cost of the project. The contingency budget caters for expenditures such as expenses and additional costs that may be attributable to slight adjustments and corrections in the construction project. The contingency budget also caters for instances where the contractor may be required by the client to make certain additions in the construction project that were not included in the initial plan.

 

Construction projects cost a fortune to actualize. In a project where billions of dollars are spent, it is important to work within a specified construction project budget.  Creating a good construction project ensures that the construction work proceeds as visualized without having to contend with shortages of funds due to unforeseen issues.