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7 Issues That Make it Likely Your Construction Project Will Run Over Budget

Written by:
Cristina Par
Mark Potterton

Construction is a capital-intensive industry, meaning overruns on a single project can affect equipment rentals and payroll. It’s a big reason why a foreman will do what they can to save money, from recycling construction waste to rushing projects, but it doesn’t seem to help much.

A study that looked at cost overruns in the construction industry over the past 70 years found that 85% of projects went over budget. Clearly, this problem is very difficult to solve. However, if you know why cost overruns happen, it can make you better at avoiding them.

7 Construction Problems That Cause Budgetary Issues

In this article, we’ll look at 7 construction problems that cause significant budgetary issues. These issues range from inaccurate estimates on invoices to hiring low-quality staff.

1. Inaccurate Estimates

Inaccurate estimates can cause a construction project's budget to balloon out of control. No matter how small or large your project, getting accurate and detailed cost estimates is one way to avoid overspending. Another recurring problem is accepting low quotes from contractors. 

This type of caveat will usually lead to unexpected errors and inflated follow-up costs. As a positive, an estimating and invoicing app for residential construction like Joist can avoid problems that come from a lack of oversight and careless planning that lead to losses.

2. Poor Planning and Design

Starting with an incomplete or poorly planned design will cause expensive reworks later on in your building process. By spending time on the planning stages of your construction project, you’ll be well aware of every intimate aspect of your project, helping you reduce costs.

When it comes to any construction project, the more detailed your architectural sketches, the better. Don’t skimp on the most important aspects of your designs, and use checklists if you have to. In the end, you’ll want to make sure that the client is clear on the scope of your project.

3. Not Accounting for Hidden Costs

Any construction project must account for hidden costs, which can add up surprisingly quickly. Keep track of budgets and be sure to take into consideration unexpected based expenses linked to project completion, which range from fees or the customer increasing project scope. 

Remember that costs associated with transportation, energy consumption, and employee salaries have to make it into your final estimate, as these expenses are vital to your business. With that said, don’t pass on every cost to the customer, or it'll be hard to stay competitive.

4. A Lack of Quality Workers

High-level construction projects rely on having quality, skilled workers at every stage of the project. Experienced professionals who diligently carry out their tasks will help save you money by staying on budget, as they can deliver consistent work that your clients will absolutely love. 

Finding the right staff requires a hands-on recruitment and onboarding process and a great network of potential staff. Safety should be your priority when training staff, so consider getting your journeypeople and upper management to show new hires how to handle their duties. 

5. Poor On-Site Management

Poor on-site management can make inefficiencies already present in your company even worse. When employees and management don’t see eye to eye, resentment could follow. To prevent any hiccups, you need to hire quality management and train them to be exceptional leaders.

While management needs to navigate interpersonal conflict, they also must understand the project scope and what it takes to deliver on time. The right managers should be able to make quick decisions and adapt to up-to-date information if you want to preserve your delicate budget. 

6. Poor Communication 

A seasoned construction worker knows that construction projects have several moving parts. When they aren’t synchronized, you’ll find that too many workers will spend their time running around without direction. Cost overruns happen when there isn’t a single source of truth.

All workers should know what channels they can use to communicate with managers and other coworkers, and they should feel empowered to bring up any inefficiencies. As a rule, you should limit communication channels to two or three so a message doesn’t get lost in the fold.

7. Poor Scheduling

Too many projects have gone over budget simply because they’re unable to schedule properly. Construction resource management is one of the most important aspects of any project. But when it’s done poorly, you won’t have enough resources available to finish a key step.

Since many construction tasks can’t even start before another is completed, workers will be forced to sit around. However, with good resource management, you can get more done in less time. Not only that, but you’ll stop paying for construction labor that isn’t actually being done.

In Conclusion… 

While cost overruns can’t be solved overnight, construction companies can take slow, strategic steps to prevent the problem from getting worse. Now that you’re aware of 7 issues that make construction projects go over budget, you can start doing what you can to fix these problems.

By Liliana Alvarez

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