In order to maintain the budget of the commercial construction project, decisions, vigilance, creativity in problem solving, diplomacy are necessary. It almost begins from the moment the project is created and continues throughout the construction period.
There are many reasons for the commercial construction project to exceed the budget. Several causes can not be appropriately evaluated or demonstrated, such as delays caused by natural disasters and loss of materials. However, many causes are related to poor planning and weaknesses in the budgeting process itself.
Typical cost management problem
Despite the most careful planning and management efforts, cost overrun of construction project will occur. Common causes of overrun include the following.
- Lack of clearly defined project scope.
- The estimation method is poor (or standard).
- Out-of-sequence start / finish activity
- Inadequate comparison between plan and actual cost.
- Unexpected technical problem.
- Project management policy and management method is poor (or not).
- Schedule defect that causes expenses of time or idle time.
- Material price to escalate.
Three major mistakes
If you review overhaul of construction cost over the past few years, you may see patterns familiar to over budget. We often make mistakes that can be adjusted and corrected in the contract phase of the project.
Managing these three weaknesses can alleviate or eliminate many of the problems listed above.
- Incomplete document design: The owner of the project can deliver the architect's plan and specifications to the contractor considering all the details specified. In fact, the agreement between the owner and the architect often only requires the designer to present the plan and specification of the general design intention. Full details may not be included. Due to the lack of complete design information, contractors are demanding more funds for work that was not clearly defined in the plan and specifications. Multiple change orders and budget overruns will occur.
- Resolution: The owner - the architect agreement, the architect 100% Done A set of drawings, specifications, and all related documents created by the engineer (and others working on the project). Responsibility for excess caused by imperfect design is attributed to the architect, not the contractor.
- Complete review of documents before bidding: Contractors, according to the contractor, can ask for additional compensation for the necessary work "not shown in the plan and specification".
- Resolution: The contract language of the project owner shall confirm that all contractors wishing to submit bids review the plan and specifications and fully understand the scope and intent of the project. The price should cover all the work necessary to satisfy "implicit or explicit design intent".
- Minimum bid: Project owners may face a lot of pressure to accept minimum bids from investors, shareholders and board members. But the lowest is not always the best. Under bid can be dangerous and costly.
- Solution : Work with trustworthy contractors who have completed a project similar to the current project. Contractors with successful on-time and successful builds within budget are more likely to produce the same results in the project.
The basis of successful budgetary control is to allow sufficient planning time to thoroughly define the scope, schedule, quality, risk, resources, and budget of construction projects Before A bid invitation will be sent to the subscriber.
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