When it comes to a construction project of any size, staying within budget is important but might not always be the easiest to do.
With so many factors to consider and unforeseen circumstances that are sure to arise, it’s not as simple as pulling a dollar amount out of thin air and calling it good for your budget.
With the right tools, creating a smart and as-close-to-accurate-as-possible budget for your construction project is possible. Using construction management software with cost-tracking abilities is your answer.
Here you will learn how to create a construction budget that includes all costs — big and small — of a construction project.
Construction projects can get pricey. And not much is worse than blowing your budget (or your client’s) during a project.
Any project — no matter how big or small — is going to cost you. The key to successfully staying on budget is utilizing a cost-tracking system that not only keeps you accountable for your spending but also tracks the money coming in.
CM Fusion’s cost-tracking software is superior to using a basic excel spreadsheet and when it comes to creating a construction budget and helping you stay within that budget, we’ve got you covered.
Our cost-tracking feature allows you to manage project costs and budgeting with a live log that organizes costs by code, category, and vendor. It also allows contractors to:
Do real-time over/under tracking
Track labor materials and fixed costs
Create custom codes and categories
Manage your construction budget anywhere via mobile or tablet
Anticipating the total cost of a project and working to stay within that budget is important for everyone involved in a construction project.
To create a construction budget, you generally include the costs of:
Materials, labor, and equipment
Non-trade costs required for a project to take place
Design and other services
Permits and fees
Unforeseen circumstances
Knowing how to create a construction budget that is as close to accurate as possible is important to everyone involved in a construction project. A construction budget:
Gives clients a more accurate idea of the total cost of their project
Allows suppliers to purchase the right amount of necessary materials
Allows contractors to more accurately staff their workers
Leaves room for changes, delays, or mistakes
Considers costs of things required for a project to happen
Creating a construction budget isn’t as simple as guesstimating how much material you’ll need, how many hours a project might take to complete, and paying your workers. Depending on the scope of the project, a construction budget can have a lot of moving pieces.
That’s why to create a construction budget that is all-encompassing and as close to accurate as possible, you’ll need to include three essential components at the very least.
Hard costs — or direct costs — have to do with the costs associated with the actual construction. They are tangible things like:
Materials
Labor
Equipment
Hard costs can be described as things only relating to the construction. Most construction projects will incur these costs at similar levels.
Take building an office building, for example. Hard costs might include things like:
Materials like concrete, wood, steel, insulation, glass windows
Labor costs to pay the wages of the workers doing the construction
Installing utilities like electricity, plumbing, water, and sewage
HVAC installation
Painting and/or wallpaper
Flooring and installation
Paving for sidewalks or parking lots
Alarm installation
Generally, hard costs make up about 70-80% of your total construction budget.
Soft costs — or indirect costs — are costs that don’t deal with the actual construction of a project. Instead, they are simply necessary for the project’s completion. These are things like:
Legal fees
Closing costs
Architect costs
Approvals
Consider that same office building. Your soft costs could include:
Engineering costs
Legal fees
Taxes
Permits
Insurance
Financing fees
Architectural planning fees
Marketing
Building equipment
Furniture
Real estate fees
Overhead costs incurred with running a business
Generally, a construction budget allocates 15-30% for soft costs.
A construction budget’s profit is the difference between the money you earned for the project vs. the actual costs of the project.
This changes project to project because a profit is dependent on:
The scope of your work
Potential costs; and
How you manage your budget
If you’re using a standard excel sheet to manage your construction project costs, chances are there is going to be a mistake or two made here or there.
Somewhere along the lines, money coming in or going out might be missed. This can throw off your entire budget and affect your overall profit.
Instead, utilizing a cost-tracking software like the one included with CM Fusion’s project management software allows for the most accurate and efficient budget tracking.
Our construction cost tracking software:
Is simple and easy to use
Allows for accurate cost-tracking data to stay on budget and maintain profitability
Directly integrates with your financial system
Take advantage of our 30-day free trial and test our construction cost-tracking software on your next project.
Learning how to create a construction budget might seem overwhelming, but with the right tools and necessary information, it doesn’t have to be so difficult.
Consider implementing these five simple steps next time you’re working on a construction budget and cost controls.
When planning a construction budget, you can’t just pull numbers out of thin air and hope they pan out.
To accurately forecast the cost of a construction project, project managers must review historical data of similar projects to gain an idea of actual numbers.
A project manager should:
Speak to suppliers to review costs of materials and how much they’ll need
Consider how many workers will be needed to complete the project
Estimate how long the project might take
Consider design options
Once the research is complete, a project manager can bring the data to the project owner or architect and choose a final design.
With this information, a list is created including all of the project’s materials and cost estimations to help guide the bidding process. During this process, a project owner chooses a general contractor and can begin building the actual construction project budget.
Stakeholder relationships can positively or negatively influence the project’s life cycle, so during this time you’ll want to identify key stakeholders and create a plan for meeting their requirements.
A project’s stakeholder might be an individual or a group or an organization that is impacted by the outcome of the project. Most importantly, they could be:
The project owner
Project sponsors
Project manager and team
Consultants
Suppliers
Subcontractors
By identifying these stakeholders and speaking with them, potential issues can be noted and resolved before the project is completed.
It’s important to note this during the pre-construction phase so the project manager has a paper trail to show where unexpected costs might arise since these unforeseen costs could impact the overall construction budget.
Despite all the time and effort put into pre-construction planning, your budget will still overlook some incurred expenses, so tracking and analyzing as you go through the project is important.
Budgeting isn’t just about tracking overall expenses, so you should consider all costs you might incur for each activity throughout your construction project.
A construction budget is complex and includes many line items. Knowing what they are and keeping track of them throughout the project is key to the project’s overall success.
In your construction budget, you should consider including:
Property costs, including:
Land costs
Real estate fees
Financing
Taxes
Professional fees and services, including:
Building and occupancy permits
Surveying, studying, and testing dees
Architectural and design services
Professional engineering stamps
Cost of materials which are typically fixed costs and can be quoted from your suppliers. They can include both site preparation materials like landscaping or building structure materials like:
Framing materials
Roofing
Insulation
Mechanical systems
Doors
Windows
Flooring
Drywall
Paint or wallpaper
Labor costs or tradespeople, subcontractors, equipment operators, and other necessary professionals. Keep in mind the true cost of human resources, including:
Hourly wages
Workers’ compensation costs and payroll expenses
Vacation and sick time
Non-productive work time and re-work
Equipment and tools and whether they are rented or owned. Consider expenses like:
Rental fees
Delivery costs
Operating costs
Fuel costs
Maintenance and repairs
Project management costs to cover the team members and any supplies or equipment they might need to perform their jobs. Things like:
Salaries of team members
Safety supplies
Security staff
Office rent
Utilities
Internet connection
Phone expenses
Office supplies
Construction technology tools like software
Liability insurance is required on all construction projects as well as performance bonds to ensure subcontractors, tradespeople and material suppliers will be paid.
Utilities and taxes, depending on the project. This could include:
Gas
Water
Sewage
Electric
Local or state taxes
Once a construction project is complete, the project’s budget shouldn’t get closed down and go away forever. It can provide your business with insight and be helpful when creating budgets in the future to help improve estimates, scheduling, and the overall project management process.
To make this phase as simple as possible, be sure you’re:
Tracking all change orders in an easy-to-use system
Identifying problem spots early on in the planning process
Creating a workaround for potential issues
Keeping stakeholders in the loop
Tracking deliverables and materials
Preparing punch lists, checklists, warranties, and necessary inspections
CM Fusion’s project management software makes both creating construction budgets and closing out a construction project simple and organized. With the ability to stay connected wherever you might be and to manage …
Projects
Reports
Scheduling
Documents
.. and so much more, the real-time access will keep you from ever missing out on anything important during your construction projects again.
Imagine working on a dozen different construction projects at once. You’re pulling up different excel sheets, entering costs and numbers all over the place, attempting to stay organized, trying to pull up data from old projects to help you guide the budget for a new project — it’s enough to give you a headache, right?
CM Fusion’s cost-tracking software makes it easy to manage construction project budgets with its many features. With things like …
Utilizing live logs for project costs and budgeting
Organizing costs by codes, category, and vendor
Tracking labor materials and fixed costs
Utilizing real-time over/under tracking
… and more, you can easily manage a construction budget from anywhere, anytime.
Not only does CM Fusion’s cost-tracking feature help you to create budgets for different construction projects, it also allows you to align your budget with different purchase orders or invoices to help keep the money coming in and going out streamlined, up to date, and on track with your overall budget.
The cost-tracking feature also separates everything by labor and materials and itemizes things to make it easier to view and understand the budget breakdown.
The major benefit? Everything is organized in one place and can be easily accessed from anywhere. Its dynamic ability allows data points to be pulled to help track costs to see if you’re staying on budget or if things need to be readjusted.
At CM Fusion, we don’t want to overcomplicate things for you. That’s why we’ve made it quick and easy to create a budget with our project management software.
Create a new project.
Click on the cost tracking feature.
Choose a budget.
Plug in budget line items, assign them a cost, and leave a brief description if necessary.
If you’ve been using excel spreadsheets for your construction project budgets in the past, we even have a simple way to import those excel spreadsheets directly into CM Fusion’s software for an easy and seamless transition.
Interested in getting started? Try CM Fusion for free for 30 days before you commit. You won’t regret it.
If you are trying to figure out where to look now, our company CM Fusion offers a free version of Construction Project Management Software. Not to mention, our customers brag about it’s ease of use, so you should be able to sign up and start managing your projects in minutes.