Every construction project needs a budget, as this estimate will anticipate the entire costs involved in the building process. Whether you are building a residential or commercial property, bridge, road, etc., the project manager must create a budget for the task with professional estimators and price costs from subcontractors and suppliers. The manager develops this budget for accounting records to be given to the developer or client, who might be a corporation, government body, or private investor.
Kanat Sultanbekov – always plan your budget in advice
Kanat Sultanbekov is an esteemed and credible construction manager from New York, known for his excellent team management skills and proven track record for completing projects in time. He successfully balances strategic planning, risk assessments, and operational processes for every project and ensures the highest standards of safety and compliance are maintained for them.
According to him, if you are a project manager, you must always plan your budget. Generally, the construction budget has the following costs-
- Property costs
- Professional services and fees
- Equipment and tools
- Project management
- Utilities and taxes
- Professional bonds and liability insurance
- Contingency costs
Planning the construction budget
The project manager needs to consider the costs listed above so that delays due to finance are avoided. Planning for the construction project depends on your experience, and the rule here is to divide all the expenses into two accounting categories- complex versus soft costs.
An insight into the significant costs
The soft costs of a project refer to expenses that are not linked directly to the physical building, road, bridge, etc. These expenses are commonly called intangible costs and generally account for about 30% of the total budget for the construction project.
The remaining 70% of the budget is allocated to its hard costs. These expenses are known as “brick and mortar” costs and are directly related to the structure being built. These expenses are tangible and fixed, as they are physical products. These costs are easier to determine and control in the project. Soft costs are the rest of the expenses that do not fall into the above category. They are harder to estimate over hard costs, as the service fees are subject to frequent fluctuation.
Apply the rule of complex versus soft costs to manage funds effectively
According to Kanat Sultanbekov, dividing the budget into hard and soft costs helps you manage your budget effectively. This exercise enables you to get a deeper understanding of the costs you need to incur, and it allows you to add in potential expenses that you might have left out by accident.
When you apply the rule of hard and soft costs, it becomes simpler to control the budget and make adjustments to those costs under your control for cost-cutting reasons. You must plan the construction budget carefully and have everything in writing to help you make informed decisions in the future successfully.