Accurate Time Tracking Is So Much Easier With Workyard
According to the International Journal of Innovation, Management, and Technology, nine out of ten construction projects go over budget—and the average construction project costs 28% more than estimated. Project overruns can cut into your profit, and clients aren’t too happy about them either. What’s the solution?
By better controlling your labor and supply costs (and avoiding costly mistakes and reworks), you can avoid the most common budget pitfalls. Today, we’re going to take a look at three of the major reasons why construction projects go over budget—and what you can do about them.
There’s a push-and-pull to construction budgeting. To win the business, you need to be competitive. But be realistic enough to preserve your profit margin—winning projects that result in losses could sink your business.
The three most common issues construction projects face today are the miscalculation of labor, steeply rising supply costs, and mistakes and reworks.
Most employers aren’t correctly calculating their labor costs. Even if they know exactly how long a job should take, their calculations can be off because:
In an ideal world, all the labor that is both directly and indirectly related to the project should be billed out to the client.
Solution: Calculate your exact labor costs by using construction time tracking software to automatically collect the exact amount of time spent per project.
Building costs are set to rise 12% in the first half of 2022. They have already risen nearly 20% year-over-year. A decade ago, building costs were relatively static. Now, though, supplies are both expensive and unpredictable. Your supply estimates can cause a job to go over budget by:
Today more than ever, customers need to be aware that supply costs are estimated rather than static.
Solution: Provide your clients with an estimated range of supply costs and let them know that rising supply costs may affect their budget.
Mistakes usually result from unclear communication—either between the client and the business or the business and its employees. Problems arise when:
Better documentation and improved communication can help clear up misunderstandings before they become costly reworks.
Solution: Organize work more effectively by consolidating all communication in a scheduling and task management app like Workyard.
It’s in the stats: projects are going to go over budget. While you may not be able to stop your next project from going over budget, you can make sure that the overage is billable.
A construction parable goes: “I once met a contractor who said he always quoted his projects at cost. But he made millions. I asked him how that could be. He said, ‘Reworks!’”
If you’ve crossed your t’s and dotted your i’s and your construction project is still going over budget, take a look at what costs can be passed to the client. Is the project going over budget because of poor planning? Or have there been changes to the project scope that fall on the owner?
Increase your chances of billing additional costs to the client by:
Some budget overruns are acts of God. If your job is rained out and you need to redo concrete work, maybe it’s a cost your company must absorb. But if the owner changes their mind about what they actually want, that can be additional profit for your company.
Of course, if you simply didn’t calculate your labor and your supplies correctly—that’s going to be on you.
If your construction project is over budget due to miscalculated costs, labor costs are likely your biggest concern. With Workyard, you can track your labor costs down to the minute.
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Workyard provides leading workforce management solutions to construction, service, and property maintenance companies of all sizes.