It’s not uncommon for construction projects to go over budget; in fact, less than one in three come within 10 percent of their budget, according to a survey from KPGM. But even though overrun is common, it isn’t something you want to occur on your project. Below, we list the five most common reasons construction projects go over budget so you can take measures to avoid them.
If the initial project estimate is incorrect, construction is bound to go over budget. Incorrect estimates can occur for several reasons, but most commonly, they’re due to being unrealistic about the scope of work. It’s crucial to determine an accurate scope during the pre-construction phase and get all team members on the same page regarding timing and cost. Otherwise, the project will be doomed from the get-go.
An Inexperienced Team
Hiring an inexperienced crew may save you money initially, but they’ll cost you in the long run. Untrained contractors work slower and may not finish tasks correctly or to your preferred level of quality. Construction delays are costly—you’ll need to pay more for labor, tool rentals, and insurance. On top of that, if your contractors make mistakes, you’ll need to spend additional time and money to fix them.
Did you use pen and paper to plan and organize your project? Or are you using old, outdated tools on site? Using outdated anything can put your project at risk. Paper is hard to access and easy to lose, and poor handwriting may render notes unreadable and increase errors. Meanwhile, old tools won’t work as productively and may even break down, resulting in downtime. If you’re using old-fashioned methods, it may be time to step into the future with high-tech software and modern gear.
While the main reasons construction projects go over budget are human error and poor planning, there are some things that are out of your control. Environmental problems, like bad weather, natural disasters, and blackouts, are hard to predict, ungovernable, and can set construction back and cost you money. That said, you can prevent environmental issues from tanking your budget by including extra money in it to account for these occurrences.
A mismanaged construction site is another factor that can drive up costs. If a manager doesn’t handle finances correctly, the project can quickly run over. Or, if they communicate poorly with their team, it can lead to confusion and bring work to a screeching halt. In this case, using management software can help immensely by keeping managers organized and holding them accountable.
Since the primary reason projects go over budget is human error, you should consider putting in place processes and technologies that can reduce human error before it impacts your project’s bottom line. Our construction material management software can help your team manage expenses and communicate quickly and productively, preventing those human errors that can result in serious cost overrun. Keep your project on track and on budget; contact us to learn more and ask for a demo of our software.