Importance of Managing Expenses of Construction Projects

construction

Project managers play a big role in a construction project. They are the ones in charge of the whole construction projects are responsible for everything involving the budget, from the preconstruction work until the aftermath. Construction projects require a lot of careful planning especially since its success indicator is achieving the lowest possible overall project costs.

The budget is the biggest concern of the project manager. Before a project even begins, project managers are already considering the cost of construction, property, related fees and taxes, insurance, planning cost, and the contingency budget. Creating a budget can help determine the affordable expenses and expenses that should be set as early as possible.

Staying on the budget requires both making an accurate estimate and sticking to it. It’s a difficult task to do that even the most experienced project managers often struggle with properly set expectations for these projects since unforeseeable events could occur.  

A well-known fact in a construction business is that no project ever goes as planned. There’s always the possibility of last-minute change orders, supply chain issues, dangerous weather conditions, and more. Project managers should be able to predict it which is how the contingency budget comes in. The contingency budget is where the unexpected costs are drawn.

If it’s included in the planning, it would prevent any additional expenses from coming out of pocket or any delays in the construction project. Of course, during unforeseeable delays, project managers should be flexible enough to make the necessary changes in the schedule.

Keeping projects on-time despite the delays is another concern in managing a construction budget. During a project, poor site management and supervision could also contribute to the additional costs of the project.  

Since one of the primary duties of the project manager is to monitor the progress of the project at every step, they have to keep an eye on the labor productivity. They have to keep track of the employees’ hours and whether they’re getting close to going into overtime pay.

Aside from labor, outdated technology also contributes to the delay in construction. While the project manager could save more on the latest technology upfront, they would be able to save time and money in the long run if they update their technology every once in a while.

Any issues and hold-ups stem from miscommunication. Meeting with the contractors, architects, utilities, subcontractors, and others involved with the project is one of the best strategies to avoid miscommunication and managing project budgets.

The lack of appropriate oversight and slacking off at monitoring can make it more difficult to stay on the budget. Depending on the nature and scale of the project, the number of people who can make purchases on contractors behalf can significantly increase the cost of the project. Furthermore, the costs related to using the machinery and rental equipment can likewise result in higher depreciation and rental costs which is why their day-to-day use onsite must be closely monitored and tracked as well.

A project manager’s job doesn’t end after planning and managing. They’re expected to do a proper research and documentation throughout the whole project. A strong job progress report should be implemented to track the project’s completion.

Once the construction is done, the project managers will be reviewing the costs of the past project to improve future budget management.  

Putting together a construction project is a really challenging effort. There is a plethora of parameters and elements to be analyzed.  More than anything, cost management is the biggest concern of a project manager which can be summed up in this infographic by Bizprac that shows how planning and tracking expenses is important in any construction project.